The US dollar has fallen again against the Norwegian krone during trading on Thursday as the oil market continues to push the “Noki” even higher. That being said, the market is likely to see a bit of support underneath, and it is worth noting that the market is forming a bit of a hammer from the session on Thursday, so we may see a little bit of a bounce. Furthermore, the market is likely to see a lot of noise above, so I think this continues to be very choppy.
When you look at this chart, the 8.60 NOK level will more than likely offer quite a bit of resistance, so if we do get a short-term bounce I think it is probably going to be short term. However, if we were to break above the 50 day EMA, currently sitting at the 8.64064 NOK level, then we could see a little bit of a break towards the 8.8 NOK level. However, that seems very unlikely, and quite frankly we would need to see the oil markets get hammered for that reason.
Another thing worth paying attention to is that the Norgesbank recently raised interest rates, with the September 23 meeting being the last time they did so. While it is only a 0.235%, the fact that the interest rate is rising and it does look like Oslo is going to do more, suggests that the Norwegian krone may continue to get a little bit of a boost as well.
If we have a sudden “risk off move,” it could send this market higher. That is not my base case scenario at the moment, and I think we just continue to sell signs of exhaustion every time we bounce. Because of this, I think it is very likely that we will eventually go looking towards the 8.25 NOK level underneath, an area that has been massive support previously. With that being the case, I think you need to look at this as a potential target, and a breakdown below the bottom of the candlestick for Thursday could be an opportunity, just as signs of exhaustion on a bounce could be. However, you have to keep an eye on that 50 day EMA as well as the 200 day EMA, because if they get broken then it could show enough momentum to send this market around.
