The USD/NOK pair is one that a lot of you unfortunately don’t trade. However, I implore that you should as it is such a pure were play to the oil markets. Quite frankly, there’s very little need for the Norwegian krone unless you’re looking at crude oil. The way the crude oil markets have behaving lately makes this a very interesting market as far as I can see. We currently find ourselves near the 8.22 handle, and as a result we are getting close to the recent highs.
That being said, one of the most important things technically on this chart is the fact that we are testing the underside of a long-term bullish trend line that had been broken recently. With that, if you normally expect to see some type of resistance and eventually a capitulation, but I don’t see anything that would push the Norwegian krone that much higher in the short-term.
Remember, it’s a commodity currency.
Remember, the Norwegian krone is most certainly a crude oil base currency, and until crude oil start writing, it’s hard to imagine that this market going to fall precipitously. However, I do recognize that this could in the long-term be the perfect set up. This would be a trend changing event if we did in fact fall significantly from here, as we could be trying to work on what is essentially a bit of a “double top” from a longer-term point of view.
However, if we can break above the trend line that is on the chart, I feel that this market is ready to head towards the .40 level, and then perhaps above there. If we make above there, obviously this is a pair that is still massively bullish. Regardless, I think you can count on quite a bit of volatility in this pair as the oil markets are simply chopping away. That being said, I believe that looking at this chart at the close of business every day could give you a nice long-term trade. It’s simple at this point, if we close on the daily chart at a fresh, new high it’s time to start buying. On the other hand, if we get a very bearish or exhaustive candle, it’s time to start selling and aiming for the 8.00 handle first, and then possibly lower.
