- We see the US dollar rally a bit against most currencies around the world during the trading session on Tuesday, in the Swedish krona wasn’t any different.
- It’s interesting that we find ourselves near the 9.5 SEK level, because this is an area that lines up as the 61.8% Fibonacci retracement level from the massive rally that we had seen in the US dollar in subsequent pullback over the last couple of years.
- Furthermore, it’s probably worth noting that the US dollar seems to be fighting back against several currencies at the moment.
Swing Trade?
At this point, I have to ask whether or not this is a potential swing trade setting up, because the 9.5 SEK level of course is not only important due to the Fibonacci retracement level, but the fact that it is a large, round, psychologically significant figure. Furthermore, you have to keep in mind that the interest rate differential most certainly favors the US dollar over the Swedish krona, so in that sense, it would make a certain amount of sense that we might see the US dollar fight back. Furthermore, we see the US dollar fighting back against other currency such as the Euro and the Japanese yen at the moment. In other words, it’s entirely possible that we just simply have been oversold over the last several months, and it’s possible that the US dollar is going to see a bit of a recovery. After all, the demise of the US economy in the United States itself was reported a bit prematurely.
The 50 Day EMA sits near the 9.77 SEK level and is plunging rather rapidly. However, you can also make an argument that we are in the midst of forming some type of double bottom, so I will be watching this very closely. If we can break above the 50 Day EMA, this could create a huge move toward the 11 SEK level over the next several months. This of course implies that the US dollar would strengthen overall, so we will have to wait and see if that happens. On the other hand, if we break below the 9.4 SEK level, then I think we drop to the 9.0 level over the next several months. Keep in mind this is a pair that can be somewhat slow moving.
Ready to trade our daily Forex analysis? We’ve made a list of the best forex demo accounts worth trading with.
Christopher Lewis has been trading Forex and has over 20 years experience in financial markets. Chris has been a regular contributor to Daily Forex since the early days of the site. He writes about Forex for several online publications, including FX Empire, Investing.com, and his own site, aptly named The Trader Guy. Chris favours technical analysis methods to identify his trades and likes to trade equity indices and commodities as well as Forex. He favours a longer-term trading style, and his trades often last for days or weeks.