EUR/SEK traded lower on Tuesday, after hitting resistance at 10.492. Overall, the pair looks to be forming a double top formation on the 4-hour chart, but before we start examining a potential reversal, we would like to see a clear dip below the 10.407 zone, marked as a support by the low of January 27th.
A dip below 10.407 could signal the completion of the double top and may initially pave the way towards the 10.365 barrier, marked by the inside swing high of January 19th. If the bears do not stop there, we could see them diving towards the low of that day, at 10.315, the break of which could carry extensions towards the low of January 17th, at 10.272.
Shifting attention to our short-term oscillators, we see that the RSI lies below 50, while the MACD, already below its trigger line, has just touched its toe below zero. Both indicators detect negative momentum, and support further declines, but we also see that the RSI just ticked up, something that makes us cautious over a small bounce before the next leg south.
In order to start examining whether the outlook has brightened again though, we could like to see a break above the 10.492 zone, something that could aim for the 10.554 zone, marked by the two tops of the pattern, formed on January 24th and 28th, the break of which would confirm a forthcoming higher high on both the 4-hour and daily charts, and perhaps set the stage for extensions towards the 10.624 hurdle, defined as a resistance by the high of September 28th.
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