Comment: The massive gyrations that kicked off in October last year, and which sent at-the-money implied volatility to a new record high (triple its mean) and the krona to its weakest ever against the Euro (11.8000), appear to have come to an equally dramatic (and to us surprising) end. Last week’s break and close below a good-sized weekly Ichimoku ‘cloud’, below the ‘neckline’ of a huge, complex ‘head-and-shoulders’ top, under Fibonacci 50% retracement support, confirms the completion of an important pattern. A similar formation can be seen in the Swedish krona against the US dollar, marking this out as a krona phenomenon. This should set off a sharp drop to 9.6000 this summer and possibly all the way back to 9.2200 (the mean from 2001 to 2008 when it held in a tiny band between 8.8000 and 9.6000).
A weekly close above 10.7000 would force us to review.
