USD/SEK traded higher during the European morning Tuesday, after it hit support at 8.3595. Overall though, the rate has been printing lower highs and lower lows below the downside resistance line drawn from the high of Apr. 5, and thus, although the current recovery may continue for a while more, we would see it as a corrective move before the next leg south.
If the bears are strong enough to take charge again from below the aforementioned downside line, we would expect them to push the action below the 8.3595 zone, thereby confirming a forthcoming lower low and the continuation of the prevailing uptrend. We may then experience extensions towards the 8.2600 area, the break of which may allow a push towards the low of Feb. 25, at 8.2055.
Shifting attention to our short-term oscillators, we see that the RSI rebounded from near its 30 line, while the MACD, although below both its zero and trigger lines, shows signs of bottoming as well. It could move above its trigger line soon. Both indicators detect slowing downside speed which supports the notion for some further recovery before the next leg south.
Nonetheless, in order to abandon the bearish case and start examining a bullish reversal, we would like to see a strong rebound above 8.4760. The rate would already be above the pre-mentioned downside line and the bulls may initially target the 8.5275 obstacle, defined as a resistance by the inside swing lows of Apr. 8 and 9. Another break, above 8.5275, may encourage the bulls to drive the battle towards the peak of Apr. 13, at 8.5965.