When Sweden decided to follow its own path regarding coronavirus it was widely criticized by many global health organizations and national governments. However, there is mounting economic evidence that Sweden’s economic health will be affected far less than its Nordic neighbors. Some current estimates show an economic contraction that will be nearly half of its neighbors. The USD/SEK has experienced a steady mid-term bearish trend and has seen progressive selling pressure as support levels crumble.
So is now the time to stand in front of the trend and make a speculative wager the Swedish Krona will develop worthwhile upwards reversals that can be taken advantage of? If you do not mind getting hit by a train, it is always worth a story at the local pub that allows you to describe your desire to go against the crowd and show everybody you know more than everyone else – even when the result proved you wrong. Except that your trading account cash totals may not like the impact of your decision to go against the trend.
The Swedish Krona has lost a bit of value in early trading today as the USD has actually risen in value against the SEK. Short term resistance is being touched as the US Dollar gains slightly on the Swedish Krona and the juncture of 8.95000 may become a target for those who believe the sudden bullish development will continue short term.
Experienced traders know that forex pairs never move in one direction. If currencies did not behave like they were in choppy waters most of the time, there would be no need to issue warnings about risk management on a daily basis to thousands of speculators. This morning’s pullback and sudden bullish behavior may set the table nicely for further tests of downside momentum which may develop sooner rather than later.
Speculators with the patience to allow the USD/SEK trade near the 8.91000 to 8.93000 levels may find it tempting and worthwhile to place limit sell order within this value range in order to short the forex pair again. The Swedish Krona may be highly valued short term against the US Dollar, but values of 8.80000 have been experienced by the USD/SEK before. Yes, it was largely during the calendar year of 2018 when the pair last tested these price junctures, but the world of coronavirus has brought us a ‘new normal’.
Swedish Krona Short Term Outlook:
Current Resistance: 8.92000
Current Support: 8.86000
High Target: 8.95000
Low Target: 8.80000
