Technical Analysis – EURSEK rallies to log new multi-year high

Anthony Charalambous, XM Investment Research Desk

EURSEK buyers insist on moving higher, something also suggested by the upward sloping Tenkan-sen and Kinjun-sen lines. The bulls have maintained control in the rally that commenced on September 25, and it seems that their focus is on higher levels of more than a decade ago.

The short-term oscillators reflect increasing positive momentum. The MACD is distancing itself from its red trigger line in the positive region, while the RSI flirts with the 70-level, despite marginally already in overbought territory. The simple moving averages (SMAs) also concur with the positive picture.

To the upside, if the bulls persist and manage to climb above the 10.9275 resistance, the pair could move to test the 10.9460 level, which is the 138.2% Fibonacci extension of the down leg from 10.8530 to 10.6080. Further efforts could drive the price higher to the 150.0% Fibo extension of 10.9760. If the buying continues, the price may extend to test the 161.8% Fibo extension of 11.0050.

If sellers emerge and reverse the price off the 10.9275 resistance, the drop could initially test a support region of 10.8530 to 10.8480, ahead of the swing low of 10.7945. If selling is sustained, the nearby Tenkan-sen and Kijun-sen lines could hinder the move to test the 10.7555 support. Breaching lower, the Ichimoku cloud and 40-day SMA around 10.7275 may be a tougher obstacle.

Overall, the short-term bias remains positive, with no apparent signals of weakening. However, a shift below the 10.7945 level could turn the bias back to neutral, while a drop below 10.6650 would turn it neutral-to-bearish.