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    IronFX Intraday Comment | USD/NOK | 10/11/2015

    • The dollar traded unchanged against almost all of its G10 peers during the European morning Tuesday, in the absence of any market moving events. It was higher against NOK, while it was slightly lower vs NZD.

    • Norway’s CPI rose 2.5% yoy in October from 2.1% yoy previously, matching Norges Bank inflation target. The figure was above market consensus of 2.2% yoy. In its latest policy meeting, the Norges Bank decided to leave its benchmark interest rate unchanged and noted that the weaker-than-projected NOK, along with a more expansionary fiscal policy, contributed to fuelling demand for goods and services. Nevertheless, while we would expect this to generate some support for krone in the near term, we would sound a note of caution in the medium term as inflation is likely to gradually recede once the exchange rate effect fades. Therefore, we would prefer to see inflation staying close to the Bank’s target in the coming months in order for NOK to gain support.

    • USD/NOK traded higher during the European morning Tuesday, breaking above the resistance (now turned into support) zone of 8.6700 (S1) to hit resistance at 8.7000 (R1), near the upper bound of a rising wedge formation. The price structure is still higher peaks and higher troughs, but given the rate’s proximity to the upper bound of the wedge I believe that a setback could be on the cards. A break back below 8.6700 (S1) is likely to confirm the case and perhaps challenge the 8.6250 (S2) zone. Taking a look at our oscillators, I see that the RSI hit its 70 line and turned down. There is also negative divergence between that indicator and the price action, which supports the case for a possible pullback. On the other hand, the MACD has broken above its downside resistance line and stands above both its zero and trigger lines, pointing north. This indicator still points to upside momentum. Having in mind these momentum signs I would treat any possible negative waves to remain short-lived and the bulls to eventually pull the trigger again in the not-too-distant future. A clear move above 8.7000 (R1) would confirm a forthcoming higher high and perhaps aim for the psychological zone of 9.0000 (R2). On the daily chart, I see that the rate is still trading above the uptrend line taken from the low of the 22nd of August 2014, something that keeps the overall trend of USD/NOK positive.

    • Support: 8.6700 (S1), 8.6250 (S2), 8.5450 (S3)

    • Resistance: 8.7000 (R1), 9.0000 (R2), 9.3000 (R3)

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