Looking at the USD/SEK pair, you can see that we initially tried to rally on Monday, but turned back around to form a rather negative looking candle as we formed a shooting star of sorts. Now that we have made a fresh low, it looks like the market can continue to go lower from here. This is a bit of an anomaly in the Forex world, as most currencies are struggling against the US dollar. The fact that the Swedish krona is showing strength is a bit surprising.
Looking at the chart, you can see I have plotted the longer-term consolidation area, and as a result I think it makes sense that we continue to go towards the bottom of it yet again. In theory, you could say it goes as low as 8.00, but truthfully I feel it’s much safer to think of this floor at the 8.10 handle. With that being the case, I think that if you can put of the volatility, this pair could very well fall to the aforementioned 8.10 handle.
Selling Rallies that Show Signs of Exhaustion
I feel that you can sell rallies the show signs of exhaustion in this market, as the longer-term consolidation has been so reliable in this pair. It isn’t necessarily that I like selling the US dollar overall, but I cannot find anything on this chart that tells me not to. While the US dollar strengthens against most other currencies, this might be one of the situations where things are just a little bit different and therefore we can take a different approach.
I would be buyers if we got above the 8.45 handle, as it would signify that the market was ready to reach towards the top of the consolidation area, but having said that I don’t think it’s going to happen in the next couple of sessions. Keep in mind that it is during the holiday season, so it’s possible that we could get a lot of erratic movement.
