Technical Analysis – EURSEK reverses higher after forming triple bottom; meets resistance at upper Bollinger band

Anthony Charalambous, XM Investment Research Desk

EURSEK rallied after breaking above the 200-day simple moving average (SMA) and the 23.6% Fibo retracement level of the down move from 10.8475 to 10.4845. The price of the pair continued its move breaching the 10.6230 and 10.6360 levels, which are the 38.2% Fibo and resistance from July 9, and completed a triple bottom reversal pattern. The price today jumped above 10.7090 which is the 61.8% Fibo, but sellers have come on board to try for a pullback.

Momentum indicators are warning that the positive incline could lose some steam. Despite the MACD in positive area and the RSI in overbought region, the MACD has flattened slightly below the red trigger line, whereas the RSI is pointing down touching the 70 level. The ADX indicates a short-term withering of the positive trend. It is also worth mentioning that the upper Bollinger band has turned downwards, and a squeeze of the bands could signal lower volatility.

Failing to endure the climb could bring the price to test the 10.6970 support, followed by friction at the mid band, before reaching the 10.6665 barrier, which is the swing low and 50.0% Fibo coupled with the uptrend line. If the selling interest persists the next support obstacles of 10.6520 and 10.6360 could unfold before the lower band.

If the upside is rekindled, the 10.7345 resistance would apply the first pressure, before a head to test 10.7620, which is the 76.4% Fibo level. A fracture through the 10.7990 resistance would unfold the high of May 13.

Summarizing, the short-term bias remains bullish, and a close above the 10.8475 high of May 13 would confirm it. Otherwise a close below the trendline could shift the bias to neutral.