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Technical Analysis EURSEK : 2020-01-07

Preparing for the publication of economic data in Sweden

In this review, we would like to draw your attention to the Euro/Swedish Krona currency pair. Will the EURSEK rise?

Such a movement means the strengthening of the euro and weakening of the Swedish krona. At the end of September last year, the Swedish Central Bank (Riksbank) raised the rate from -0.25% to 0%. After that, the exchange rate of the krona noticeably strengthened against the euro. Now, the Riksbank rate coincides with the ECB rate. Meanwhile, the EU economic indicators look a little better, which may cause an upward correction of the EURSEK. Inflation in Sweden is 1.8%, while in the Eurozone it is only 1.3%. The trade balance of Sweden has fluctuated around zero since 2014 and is often negative in monthly terms. The Eurozone trade balance is continuously positive. A number of significant macroeconomic data will be released in Sweden this and next week which may affect the Riksbank’s decision on the rate at its next meeting on February 12. The most important indicator may be inflation in Sweden for December, which will be published on January 15.

EURSEK

On the daily timeframe, the EURSEK: D1 bounced off the support line of the neutral channel and is trying to move towards its upper boundary. A number of technical analysis indicators formed buy signals. The further price increase is possible in case of negative economic indicators in Sweden.

  • The Parabolic indicator gives a bullish signal.
  • The Bollinger bands have narrowed, which indicates low volatility. Both Bollinger bands are titled upward.
  • The RSI indicator is above 50. It has formed a positive divergence.
  • The MACD indicator gives a bullish signal.

The bullish momentum may develop in case EURSEK exceeds its last high at 10.55. This level may serve as an entry point. The initial stop loss may be placed below the Parabolic signal and the three fractal lows at 10.4. After opening the pending order, we shall move the stop to the next fractal low following the Bollinger and Parabolic signals. Thus, we are changing the potential profit/loss to the breakeven point. More risk-averse traders may switch to the 4-hour chart after the trade and place there a stop loss moving it in the direction of the trade. If the price meets the stop level (10.4) without reaching the order (10.55), we recommend cancelling the position: the market sustains internal changes that were not taken into account.

Summary of technical analysis

PositionBuy
Buy stopAbove 10.55
Stop lossBelow 10.4

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