By Greg Holden – The US Dollar’s recent resurgence has caused a stir across a number of markets, but the subsequent rumblings are not unexpected. Any time investors see a sharp movement by any currency there is an understanding that a correction is in the works. The economy does, after all, move in cycles. For some of the Scandinavian currencies, like the Swedish Kroner, the timing could not be better, as I will demonstrate using the chart below.
– The chart shown here is the weekly chart of the USD/SEK, courtesy of ForexYard’s trading platform.
– The indicators used are the Relative Strength Index (RSI), Stochastic (fast), and the DeMarker.
– Point 1: Here we can see that the price of this pair has recently struck a long-term significant barrier just above the current price of 7.9017. This indicates the level of pressure we should see being placed on the greenback.
– Point 2: The RSI is signaling that the pair is floating well within the over-bought territory and has recently turned downward, indicating a reversal may be happening as I write these words.
– Point 3: Our Stochastic (fast) is showing an impending bearish cross, the Stochastic (slow) not shown below, is showing something similar, but has the cross a little further off in the making. Both of these indicators (slow and fast) are suggesting that any day now this pair should see a sharp downward correction, if not outright reversal.
– Point 4: The DeMarker indicator identifies price exhaustion and stability. When the line within this indicator moves above 0.7000 it is said to be expecting a bearish reversal. The higher above 0.7000 the line goes, the stronger the bearish tendency becomes. We can see below that the line is at the very top of the indicator and technical traders should thus be expecting little more than a downward movement for this pair and trade accordingly.
USD/SEK – Weekly Chart
Forex Market Analysis provided by Forex Yard.
© 2006 by FxYard Ltd
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