Technical Analysis – USDSEK completes head and shoulders pattern; sellers take control

Anthony Charalambous, XM Investment Research Desk

USDSEK may continue to lose ground after diving below the neckline of the head and shoulders pattern and the fresh 9.4640 swing low. Further boosting the negative picture is the bearish crossover of the 100-day simple moving average (SMA) by the downward sloping 50-day one.

The short-term oscillators are also reflecting increasing negative momentum. The MACD is declining below its red trigger line in the negative zone, while the RSI, in the bearish region, is falling and has reclaimed the 30 level. Moreover, the nearing of a bearish crossover of the 200-day SMA by the 20-day one could further empower the negative view.

If sellers manage to close below the 9.4640 low, the 9.4106 support – which is the 76.4% Fibonacci retracement of the up leg from 9.2390 to 9.9630 – could deny further declines towards the swing low of 9.2985 from July 18. Overtaking this too, the two-month low of 9.2390 could challenge the bears ahead of the 9.2140 support from April 17.

Alternatively, pushing above the 61.8% Fibo of 9.5150, the nearby swing high of 9.5430 could prove to be a challenge to overcome as it is where the 20- and 200-day SMAs look to meet. If buying persists, the 50.0% Fibo of 9.6007 may restrict the climb towards the 9.6600 point, where the 50- and 100-day SMAs reside. Moving higher, the 9.7630 swing peak and 23.6% Fibo of 9.7920 may halt further advances.

Summarizing, the short-term bias is bearish, confirmed by the completion of the head and shoulders pattern.