USD/SEK 4H Chart: Channel Down
- The American Dollar is gradually loosing value against the Swedish Krone in a three week long narrow descending channel.
- The pattern represents a continuation of the general downtrend that has started in beginning of the year.
- During the last two weeks the currency rate has been moving along the 20- and 55-period SMAs, which blocked any attempts to break to the top.
- As a result, the pair has successfully slipped through the monthly S1 at 8.3063 and S2 at 8.1729.
- However, both times the drop was attributed to announcement of the ECB’s and Fed’s interest rates.
- Hence, when technical indicators will be updated, there is a high chance that one of them or combination of them will force the pair to make a rebound.
- But for the rest of the week is expected to continue to move downwards.
The US Dollar was trading in a long-term falling wedge against the Swedish Krona prior to breaching this pattern on Monday. The strong downside momentum had allayed for the past two weeks and, consequently, the pair entered a consolidation phase.
It seems that the last up-wave which started at a two-and-a-half-year low at 7.8948 is about to change the overall market sentiment to bullish in the long term. However, it is expected that the rate might still go for a minor correction downwards this week.
Full retracement down to the upper wedge boundary is unlikely, setting the bottom target somewhere near the 7.96 mark where the 200-, 100– and 55-hour SMAs are located. Subsequently, the pair should surge back to the monthly PP at 8.026 and eventually push even higher.