Swedish crown reversal signal blunted but still supportive
Nov 13 (Reuters) -A bout of sideways price action for EUR/SEK has weakened the significance of the November 6 bearish engulfing candlestick but the signal received strong confirmation the following day and the trend reversal is still alive.
Engulfing lines are a two-candle pattern where the second candle's real body (shaded area between the open and close) completely engulfs the previous session's real body. In a bull trend the second candle would have a bearish real body; selling pressure has overwhelmed buying pressure.
EUR/SEK has played out sideways since Nov. 7 and this has sapped bearish momentum from the market. Fourteen-day momentum remains positive and the relative strength indicator is flatlining in neutral territory.
A December 2 Ichimoku cloud twist with 11.4005-11.4075 parameters could fight the crown's corner and the removal of Fibonacci retracement levels at 11.6006 and 11.5327 opens a test of the key 50% level at 11.4778. The Fibonacci levels are taken off the Sept. 27-Nov. 5 11.2450-11.7105 rally.
The base of the short-term range is at 11.5320, Nov. 12 low, and initial resistance is at the 11.6063 10-day moving average.
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EUR/SEK daily candle chart: https://tmsnrt.rs/4fqrxoK
(Peter Stoneham is a Reuters market analyst. The views expressed are his own)
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