The USD/NOK pair fell hard during the day on Tuesday, crashing into a major uptrend line. I believe that this market will continue to go higher, not only because of this trend line, but the fact that the 7.85 level below is so supportive. I think it’s only a matter of time before the US dollar continues to go higher against the Norwegian krone, simply because oil markets are so soft. Remember, Norway is a major exporter of oil, and as a result most Forex traders use it as a proxy for oil markets.
It is not until we get well below the 7.85 level that I would start selling this market. On top of that, I would need to see the oil markets start strengthening all of a sudden. That’s not something I anticipate seeing anytime soon, and as a result I am willing to buy this pair on short-term supportive candles as well. Ultimately, I think that we should head to the 80.40 level given enough time.
Buying dips going forward
I believe that it’s only a matter of time before the dips offer buying opportunities, so I am looking forward to buying them. Pay attention to the US Dollar in general, and if it starts looking a bit stronger, I believe that the Norwegian krone will get absolutely demolished as it is much more risky than many of the other currencies that you can trade the US dollar against. It’s highly leveraged to oil, and as a result that means that it is the antithesis of those markets, especially Brent.
Don’t worry about the spread in this market as it tends to be fairly high. 50 or even 75 pips is the norm, but quite frankly the pips have less value, so it all works out to be roughly the same anyway. Because of this, the pair does lend itself to be more of a long-term type of trading market, but quite frankly that suits me just fine.
