Head and Shoulders Bottom in USD vs SEK

The new concerns about world growth and profit-taking on what have been strong performers in H1 has seen the US dollar push through a neck line of a potential head and shoulders bottoming pattern of against the Swedish krona. However, short-term momentum readings were over-bought when the dollar rose through the SEK8.00 level. Look for the dollar to find support in the SEK7.93-SEK7.95 area and get a running try at the SEK8.00 level again.

The left shoulder was formed May 8-11 near SEK7.63. The head was formed on June 1, near SEK7.35 and the right shoulder was carved out June 10-12 just below SEK7.60. The neck line is found just below SEK8.00 and near last week's high of SEK7.95. If the head and shoulders pattern is valid, the minimum measuring objective is near SEK8.50

There is also a trend line drawn off this year's high set in early March near SEK9.33 and the April 21 high near SEK8.74. It comes in today near SEK7.96.

The fundamentals that could be behind the move that this technical view implies would include the fact of Swedish banks' troubling exposures to the Baltics, the Scandi bloc's smart recovery in recent weeks, and a growing realization that the economic green shoot remain terribly fragile.