USD/SEK approaching major confluence of liquidityThe US dollar has initially tried to rally during the trading session on Tuesday but then turned around to fall towards the 9.25 SEK level. This is an area that has been important more than once as you can see in the past, but there are also a major confluence of indicators in this general vicinity as well.
The market looks very supported in this area, but we are crashing into it, which makes quite a bit of sense when you think about the Federal Reserve stepping away from its hawkish monetary stance. Beyond that, we could have more of a “risk on” move as well, which would also break this market down. After all, the Swedish krona is considered to be a currency that is highly influenced by technology.
The market is testing the 50% Fibonacci retracement level, which of course attract a lot of attention as well. Quite frankly, the 200 day EMA sitting just below also adds a lot of support. That being said, there is a simple way to approach this market, the one that I will be using to go forward.
I will use the close on Tuesday as a barometer as to which direction we should be trading. If we can break above the highs of the trading session, that would show a significant break higher based upon the fact that we have already repudiated buying. A break above there opens the door to the 9.35 SEK level, possibly even the 9.45 SEK level. On the other hand, if we break down below the bottom of the candle stick, it opens up the door to the 61.8% Fibonacci retracement level down at the 9.15 SEK.
While the market looks very negative, we do have quite a bit of support. That being said though, things certainly look bad for the greenback in general so any bounced will probably be somewhat short-lived.
