The USD/SEK experienced a sudden surge higher yesterday and resistance levels were brushed aside. Standing in front of a trend can be a dangerous maneuver in forex but there are certain times when a trader needs to contemplate the action. Today may be the day to question if the short term trend from the past day must be challenged.
The USD/SEK traded slightly higher than the 8.88000 juncture yesterday, but this occurred after the Swedish government announced a spending budget for 2021 which will include an extra 12 billion USD to reinvigorate its economy. There is a saying in trading that says buy the rumor and sell the fact. Yesterday’s trading produced rapid buying of the USD/SEK when word broke out that the large budget package was being initiated.
After hitting the high watermark of 8.88000 approximately yesterday, the USD/SEK than went to a low of nearly 8.83000. Since then and into early this morning the forex pair has established a trading range which has bounced essentially between the 8.84000 and 8.87000 price range. As of this writing, the higher marks are being touched again.
Speculators need to ask themselves if they are brave enough to challenge the highs being made in the USD/SEK and seek selling positions. The USD/SEK looks overpriced currently; yes it can be argued the past month of trading has seen the forex pair turn slightly bullish. So why speculate against the bullish trend? Because without yesterday’s reactionary move to the budget proclamation in Sweden, the USD/SEK would actually be in a fairly middle ground price range within its one month chart technically and this would be displaying the pair remains engaged in a bearish trend mid-term in a healthy manner.
Selling the USD/SEK may seem like a speculative endeavor and one that is challenging the short term trend. However, resistance levels near the 8.89000 to 8.93000 junctures do appear capable of holding off another higher move. Perhaps this is wrong, but if resistance holds and price action sustains itself within the current value band, selling the USD/SEK and using resistance levels as stop losses feel like the more worthwhile trade.
Swedish Krona Short Term Outlook:
Current Resistance: 8.89000
Current Support: 8.81000
High Target: 8.93000
Low Target: 8.72000
