EUR/SEK edged south yesterday, breaking below the 10.3100 barrier, which had provided good support since the 20th of September. The rate continues to trade below the tentative downtrend line taken from the peak of the 29th of August, as well as below the longer-term prior upside support line drawn from the low of the 31st of January. In our view, those technical signs keep the near-term outlook negative.
We would expect the bears to take charge again soon and perhaps aim for our next support zone of 10.2600, defined by the low of the 1st of August. Another dip below that level could set the stage for the 10.2200 key territory, which proved a reliable support in the beginnings of July.
That said, before the bears decide to pull the trigger again, we see the case for a corrective bounce. That view is derived from our short-term oscillators. The RSI bottomed near its 30 line, while the MACD, although below both its zero and trigger lines, shows signs that it could start bottoming as well. A clear break back above 10.3100 could confirm the case, with the rebound reaching the 10.3800 resistance or the crossroads of the trendlines we mentioned in the first paragraph. The bears may see that as a good opportunity to jump in and drive the battle towards lower levels.
In order to abandon the bearish case, we would like to see a decisive close above 10.4300. Such a move would bring the rate back above the upside support line taken from the low of the 31st of January and may confirm the break of the short-term tentative downtrend line. Then, we would expect the bulls to aim for the 10.5100 territory first, the break of which could carry extensions towards the 10.5700 obstacle, marked by the peak of the 14th of September.
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