USDSEK closes within previous day's range
US Dollar/Swedish Krona (USDSEK) Technical Analysis Report for Jul 31, 2020 | by Techniquant Editorial Team
USDSEK ended the month -5.85% lower at 8.7792 after surging 787 pips (0.9%) today on high volume. This is the biggest single-day gain in over a month. Closing within the previous day's range, prices missed to decisively move beyond the prior day's trading range.
Daily Candlestick Chart (USDSEK as at Jul 31, 2020):
Friday's trading range has been 1573 pips (1.81%), that's far above the last trading month's daily average range of 995 pips. Things look different on the weekly timeframe, where the market's trading range of the last week has been slightly below the market's average weekly trading range. The longer-term, monthly volatility is currently significantly higher than usual for USDSEK.
In a volatile session, prices traded above the previous day's high as well as below the prior day's low, forming a bullish Outside Bar. Even with a weak opening the currency managed to close above the previous day's open and close, forming a bullish Engulfing Candle. Additionally, one bullish candlestick pattern matches today's price action, the White Candle.
Buyers managed to take out the key technical resistance level at 8.7119 (now S1), which is likely to act as support going forward. The last time this happened on July 7th, USDSEK actually lost -0.87% on the following trading day. The FX pair was sold again around 8.7976 after having seen highs at 8.7935, 8.7896 and 8.7932 in the last three trading sessions. Obviously there is something going on at that level.
The trend is clearly bearish, showing an intact downtrend in the short, medium and long-term.
Among the 11 market conditions that our pattern recognition engine identified today, the statistics for the OHLC Patterns based market condition "Bullish Engulfing Candle" stand out. While it is usually interpreted as bullish, it has actually shown to be bearish for USD/SEK. Out of 85 times, USDSEK closed lower 58.82% of the time on the next trading day after the market condition occurred. The optimal exit for swing trading this condition on the short side has been after two trading days, showing a win rate of 60.00% with an average market move of -0.14%.
With five out of the seven Major FX Pairs closing lower today, the ones that stand out on the negative side are NZDUSD losing -1.04% and AUDUSD closing -0.72% lower. On the flipside the best performers have been USDJPY closing 1.12% higher and USDCHF gaining 0.48%. Looking at the other Minor FX Pairs and Crosses, the winners of the day have been USDZAR surging 1.87% and GBPZAR closing 1.79% higher. The worst performers of the day have been NZDCAD tanking -1.15% and NZDHKD closing -1.05% lower. Read more