USD/SEK tumbled on Tuesday, breaking below the 8.9870 barrier, which acted as the lower end of the sideways range that had been containing most of the price action since the 1st of November. Then, the rate hit the 8.9500 support line, defined by the lows of the 18th and 22nd of October and subsequently, it rebounded somewhat. That said, as long as the pair is trading below the 8.9870 hurdle, we would consider the near-term picture to have turned negative.
If the bears are willing to stay in the driver’s seat and manage to push the rate below 8.9500, then we may see them aiming for our next support level, at around 8.9300. Another dip below 8.9300 may carry more bearish implications and could pave the way for the 8.8900 zone, fractionally above the lows of the 16th and 17th of October.
Our short-term momentum studies detect accelerating downside speed and support the case for this pair to continue drifting south for a while more. The RSI moved lower and now appears ready to move below its 30 line, while the MACD lies below both its zero and trigger lines, pointing down as well.
Even if the rate recovers a bit more, as long as the recovery stays limited below 8.9870, we would still consider the short-term outlook to be cautiously negative. We would like to see a decisive break back above 9.0000 before we start examining whether the sellers have abandoned the battlefield. Such a break could confirm the rate’s return within the aforementioned sideways range and could see scope for extensions towards 9.0550.