EUR/SEK has been trading in a tumbling mode since Wednesday, when it hit the downside resistance line drawn from the peak of May 21st. Yesterday, the rate fell below the support (now turned into resistance) of 10.580 and at the time of writing, it looks to be heading towards the 10.532 barrier, defined by the inside swing high of July 4th. As long as the rate continues to trade below the aforementioned downside line, we will hold a bearish stance with regards to this exchange rate.
If the bears are willing to overcome the 10.532 barrier soon, then we may see them driving the battle lower, towards the 10.495 zone, which is near the low of July 4th and slightly above the low of the day before. That said, we would like to see a clear break below that hurdle before we get confident on further declines. This would confirm a forthcoming lower low on the daily chart and could see scope for larger bearish extensions, perhaps towards the 10.448 area, defined by the lows of April 19th and 22nd.
Taking a look at our short-term oscillators, we see that the RSI drifted south and now appears ready to touch its 30 line. The MACD lies below both its zero and trigger lines, pointing down as well. These indicators detect strong downside speed and support the case for EUR/SEK to continue sliding for a while more.
On the upside, we would like to see a strong recovery above 10.638 before we start examining whether a positive reversal has taken place. Such a move would, not only bring the pair above the pre-mentioned downside line, but also confirm a forthcoming higher high. The bulls may then get encouraged to push towards the peak of June 21st, at around 10.665, the break of which may set the stage for advances towards the 10.700 territory, near the high of June 19th.
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