The USD/NOK pair fell initially during the session on Wednesday, but as you can see bounced from these 7.7980 region for the second day in a row, this time forming a hammer. You can see on this chart that I recently had the 7.85 level as resistance, so it should now be somewhat supportive. Adding credence to this area as support, you can see that there is an uptrend line as well, as it is just below current price. With that being the case, I think it’s only a matter time before the buyers step in, and perhaps take advantage of perceived value in the US dollar.
Remember, the Norwegian krone is a petrocurrency, which means that it is highly sensitive to oil markets. After all, quite a few of those oil rigs that we see in the North Sea are Norwegian in origin, so that of course means that the Norwegian krone will follow the value of oil in general. On top of that, barrels of oil are priced in US dollars, and that means of course that the two financial instruments tend to move in an inverse manner.
Buying dips, finding support
This is a marketplace that you could have bought dips in for several months, every time you found support. This is a marketplace that I believe will continue to offer plenty of buying opportunities going forward, and they do like the idea of owning the US dollar in general. I have no interest in owning oil, and even less interest in owning Scandinavian currencies, as they in general look fairly soft. Oil markets look very soft as well, so that’s a bit of a “double whammy” when it comes to this pair.
I think that this market is heading back to be a .40 level, and that is exactly what I am aiming for if we can get back above the top of the hammer from the Wednesday session. On the other hand, if we break down below the trend line, then I believe the market will then head to the 7.50000 level.
