EUR/SEK breaks below an upside support line

EUR/SEK has been in a sliding mode since July 20^th, when it hit resistance at 10.2700, trading below a downside resistance line drawn from that peak. What’s more, yesterday, the rate managed to break below the upside support line taken from the low of June 11^th, while today, it continued to slide, overcoming yesterday’s low. In our view, all these technical signs paint a negative short-term picture.

If the bears are strong enough to stay in the driver’s seat, we would expect them to push the rate down to the low of July 12^th, where a break is likely to trigger extension towards the 10.1240 area, marked by the low of July 6^th and near the low of July 8^th. If the fall is not stopped there either, then we could see declines towards the 10.1000 territories, which provided strong support between June 24^th and 30^th.

Shifting attention to our short-term oscillators, we see that the RSI drifted lower and now looks ready to challenge its 30 lines, while the MACD lies below both its zero and trigger lines, pointing down as well. Both indicators detect strong downside speed and support the notion for further near-term declines in this exchange rate.

Now, in order to abandon the bullish case, we would like to see a rebound back above 10.2480. This could signal the break above the aforementioned downside line taken from the high of July 20^th, and may initially target the 10.2700 barriers, defined as resistance by the highs of July 19^th and 20^th. If that zone doesn’t hold, then its break would confirm a forthcoming higher high on the daily chart and may pave the way toward the 10.2950 area, near the high of April 5^th, the break of which could carry extensions towards the peak of November 6^th, at around 10.3140.