NOK/SEK has been in a rally mode since January 13th, when it hit support at the upside line drawn form the low of December 6th. The strong recovery also resulted in the break above the 1.0310 zone, which acted as the upper bound of the range that was containing most of the price action since December 22nd, while today, we saw the rate emerging above 1.0400 for the first time since February 2020. In our view, all this paints a positive picture.
We believe that the rate could soon hit the 1.0435 barrier, marked by the high of February 25th, 2020, from where the rate could correct lower, due to the current strong advance. However, as long as the pullback stays limited above the 1.0310 zone, we would see decent chances for a rebound and a break above the 1.0435 hurdle. Something like that could pave the way towards the psychological figure of 1.0500.
Shifting attention to our short-term oscillators, we see that the RSI emerged above its 70 line and keeps pointing up, while the MACD lies above both its zero and trigger lines, pointing up as well. Both indicators detect strong upside speed and support the notion for further advances in this exchange rate.
We will start examining the bearish case only if we see a clear dip below the 1.0225 barrier, which is the lower end of the aforementioned range. This will also confirm the break below the upside support line taken from the low of December 6th, and may initially target the low of December 29th, at 1.0173. A break below that barrier could pave the way towards 1.0115 zone, which provided resistance between December 16th and 20th, the break of which could see scope for declines towards the low of December 20th, at 1.0025.
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