The USD/SEK pair fell hard during the session on Monday, slamming into the 8.15 level. This of course makes sense as the US dollar got sold off drastically in general, and bouncing from that level also makes sense based upon the fact that it has been so supportive recently. I believe that this market forming this massive hammer suggests that we will eventually bounce and go higher, but I don’t necessarily think it’s going to happen right away. There is a good chance that we need to pull back slightly and trying to slowly build up support to the upside.
The US dollar was most certainly oversold during the session, and I have to wonder whether or not it was an algorithmic trading at its worst. After all, it was across the board and without any real sense. I believe that the market is currently going to find the 8.15 level to be massively supportive, just as I think the 8.50 level will be massively resistive. I also think that this is a bit of an illiquid pair, so that of course can exacerbate these types of moves.
Patience will be needed
Patience will be needed at this point in time, and I believe that if we can find a nice buying opportunity at lower levels, we will have to take it. After all, this is a market that has been grinding away sideways overall, and with that it would not surprise me at all to stay within this range. Ultimately though, I do think that part of this is a correction due to what we once believed were interest rate expectations out of the United States, but at the end of the day the Swedish haven’t exactly shown any interest in raising rates soon either. Because of this, a nice range makes sense, and we could be looking at a simple continuation of what we’ve seen so far.
