The USD/NOK is a pair that most retail traders tend to ignore, which is too bad. It is highly correlated to crude oil and can really get moving when the crude oil market does the same. Most people are concerned about the spread differential, but you need to keep in mind that the PIP value in this market is much smaller. In other words, you need to get used to the idea of trading “big figures.”
Norway is a major exporter of crude oil, so it is essentially a currency that behaves very much like the Canadian dollar. While there has been a little bit of a rise in the US dollar against the krone, the market ended up slamming into the 50-day EMA during the trading session, and that does suggest that a certain amount of technical resistance will be found in this general vicinity. In fact, you can see how the candlestick was very neutral for the day, suggesting that perhaps most traders out there were starting to think the same thing. Beyond that, I see a significant amount of clustering near the 8.55 NOK level, where we had sold off from previously. Having said that, we not only have the 50-day EMA, but we also have the 200-day EMA that sits just above. In other words, there is a “pocket of resistance” that extends all the way up to the 8.62 level, so I am simply looking for signs of exhaustion that I could start selling.
When you trade this market, you also need to keep an eye on the crude oil market, which did have a rough day on Wednesday. As long as crude oil continues to struggle, this pair will be able to rise. However, crude oil is in a very strong uptrend, so I think that it is probably only a matter of time before the buyers return, and when they do that should send this pair lower as the Norwegian krone is a great way to play the crude oil demand scenario. Furthermore, the US dollar has been very weak against multiple currencies, so that is something worth paying attention to as well. I do believe at this point we are getting stretched, so it all kind of lines up quite nicely.
