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Market Analysis

Macro technical analysis of GBPSEK

June 12, 2019
BY Michael Stark

The daily timeframe of pound-krona (GBPSEK) features an uptrend that has lost momentum recently. This symbol’s most recent high and low are probably the most important areas. Support then is around 11.90 and resistance at approximately 12.58. Based on price action and indicators, these areas seem to be strong and would probably resist further testing. Also in view is the crucial psychological area of 12.00 which price is currently testing.

Technical indicators on GBPSEK D1

Moving averages are somewhat mixed on this timeframe. While price remains above the 200 DMA, it is below all of the 20 (from Bands), 50, and 100 DMAs. Lower momentum as price drew near the 200 DMA suggests that this is a strong area of support. Upward momentum is also demonstrably weak as the 50 and 100 DMAs have converged almost to the point of overlapping.

A movement above the 20 DMA and away from the current psychological zone might continue until the next SMAs above. At this point, these lines could function as resistance. The slow stochastic (15, 5, 5) supports a positive impression given that the main line has only just moved out of oversold. The upward crossover on this indicator occurred early last week around the same time as the loss of momentum. MACD (12, 30, 9) concurs as well, with the histogram moving above the signal line.

Price action and Fibonacci

Price action on this timeframe is consistent with the overall impression from indicators of weaker downward momentum. A series of dojis and near-dojis last week preceded Friday’s gravestone doji. However, there was no downward follow-up after this. We might point instead to yesterday’s engulfing pattern. Combined with near-oversold conditions, this suggests upside potential in the next few periods.

The 23.6% Fibonacci retracement area coincides fairly closely with the 20 DMA. This indicates the strength of nearby higher levels as resistance. Traders should consider the possibility that price might retreat downward from around 12.06 to test support.

Technical analysis GBPSEK: summary

Macro technical analysis of GBPSEK suggests decent upward potential over the next few periods. However, traders should be aware of crucial data on inflation from Sweden on Friday. These releases could well alter the technical picture completely.

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