Technical Analysis – USDSEK capped by 100-day SMA and 50.0% Fibonacci; possible formation of a head and shoulders pattern
Posted on November 4, 2019 at 4:24 pm GMT
Anthony Charalambous, XM Investment Research Desk
USDSEK buyers are attempting to push above 9.6020, which is the 50.0% Fibonacci retracement of the up leg from 9.2390 to 9.9630, and where the 100-day simple moving average (SMA) resides. The bulls’ efforts to halt further losses could be in vain, as a head and shoulders pattern appears to near completion, with a close below 9.5540 and the neckline potentially signaling a deeper downtrend.
The short-term oscillators reflect mixed signals but lean towards the negative picture. The MACD is declining below its red trigger line in the negative zone. The RSI, however, is in the bearish territory, but has turned up near the 30-level, indicating some improvement to the upside. Moreover, backing the negative picture is the bearish crossover of the 50-day SMA by the 20-day one, despite the bigger positive sentiment.
If the 100-day SMA continues to restrict upside pressure, the bears could face initial support from the 9.5540 level and the neighboring neckline. If breached, the decline would encounter nearby support from the 61.8% Fibo of 9.5170 and the 9.4950 trough from August 14, where the 200-day SMA also lies. Overcoming these levels could see the pair trying to reach the target of 9.2390.
To the upside, if the bulls overtake the 9.6020 level, the price could rally, finding some interference at the 20- and 50-day SMAs around 9.7050 and 9.7330 respectively, ahead of the 9.7490 swing high. Moving higher, the inside swing low of 9.8290 could apply some pressure ahead of the 9.8910 resistance.
In brief, the short-term bias is currently neutral-to-bearish. The outcome of the head and shoulders pattern would reveal the direction.