EUR/SEK 4H Chart: Channel Down
|USD/JPY 4H Chart: Double Bottom
Comment: Judging by the situation in the daily chart, USD/JPY is currently in the middle of a new bearish wave within a descending channel. However, because of solid demand circa psychological 100 yen level, there is a good chance of a rally. This possibility is reinforced by the fact that the price is forming a double bottom, a pattern that implies a strong recovery once the neckline, in this case 102.50, is breached. If this is the case, the first target will be a cluster at 103.30/20, while the upside will likely be limited by the major downtrend line at 105 yen. Among the arguments against a more expensive Dollar are bearish technical indicators and the fact that the currency is overbought—62% of positions are long.
EUR/SEK 4H Chart: Channel Down
Comment: The near-term outlook on EUR/SEK is bearish, as the currency pair has recently formed a well-defined descending channel following a failed attempt to revisit 2015 highs. After a small upward correction from 9.41 the pattern implies a sell-off from its upper boundary at 9.46.
The decline, however, is expected to be limited by support at 9.36 because of the four-month uptrend line. Strength of the bulls is also implied by the longer-term technical indicators. Accordingly, we should expect the price to leave the boundaries of the pattern towards the end of the next week. Nevertheless, prolonged appreciation of the Euro is unlikely, since the currency is overbought: 74% of positions are long.
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