Potential short reversal setting up for the Swedish Krona
On the 4H charts, the USDSEK is at an interesting point. We can see that for the most of April, the pair has been in a clean and long uptrend and is now in oversold territory (the Fibonacci extension indicates a move well over 200%). Additionally, the pair has reached a previous swing high. This clearly acts as a resistance level, which the price hasn't been able to break.
Instead, a double top was created, followed by a strong move lower. For the first time in a long time, our moving average has been broken. This has all the signs of a reversal in the making.
An aggressive trader might already be tempted to enter here, but I reckon that the pair will make a retracement to the 9.06000 area first as a way for the sellers to catch their breath. If we see strong selling momentum afterwards, I will be looking for a short entry. Of course, price might move lower straight away too.
I've laid out some of the levels (in light blue) where I can see the price hold up a bit or even change direction. However, if the trending markets of the previous months are any indication, we might see a nice move down.
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Instead, a double top was created, followed by a strong move lower. For the first time in a long time, our moving average has been broken. This has all the signs of a reversal in the making.
An aggressive trader might already be tempted to enter here, but I reckon that the pair will make a retracement to the 9.06000 area first as a way for the sellers to catch their breath. If we see strong selling momentum afterwards, I will be looking for a short entry. Of course, price might move lower straight away too.
I've laid out some of the levels (in light blue) where I can see the price hold up a bit or even change direction. However, if the trending markets of the previous months are any indication, we might see a nice move down.
Find more analysis on smartforexlearning.com and give us a follow:
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Comment:
The retracement to the 9.06000 level has now almost happened. Looking for momentum to the downside now. An engulfing bar or pin and drive pattern would be what I'm looking for.
Comment:
The last 4H candle gave us the downside momentum we were looking at.
Comment:
Fuelled by a Trump comment that the US dollar "is getting too strong", the price has now broken the first intermediate support and seems willing to move lower.