Even though both currencies kept pulling each other back and forth, since mid-October the USD seems to be winning this game, as USD/NOK keeps climbing higher. The pair is still above it’s short-term upwards moving support line taken from the low of the 15th of October. That said, USD/NOK could retrace slightly back down at some point, but as long as the upside line remains intact, we will continue looking north for this pair. Certainly, tomorrow’s Norges Bank interest rate release, together with the Norwegian unemployment rate, could bring a bit more volatility than usual, so traders should remain cautious at the time of the release.
Because USD/NOK has broken today the key resistance area at 8.312, marked by yesterday’s peak and also the 11th of September low, we could expect the pair to make a push a bit higher up. The level that we are watching for the next possible resistance is at 8.343, which held the rate down on the 12th of September. We could see USD/NOK stalling for a while there, or even correcting slightly lower, so that the bulls could regroup and take charge again by gaining advantage of the lower rate. A break above the 8.343 level may open the path towards the next potential area of resistance at 8.372, marked by the high of the inside swing high of the 11th of September.
Our oscillators, the RSI and the MACD are currently supporting the idea of a possible continuation to the upside. The RSI is above 50 and is pointing to the upside. The MACD is also above its zero and trigger lines and is still pointing higher.
Our alternative scenario could come into play if we see a break below the aforementioned short-term upside support line and also a close below the 8.241 support, marked by the intra-day swing low of the 22nd of October. Only then we could get comfortable of examining lower levels like the 8.191 area, or even the 8.163 zone, marked by the intra-day swing high of the 16th of October. A break below that zone could carry more downside extensions, but the slide could be limited near another, more flat, short-term upside support line running from the low of the 26th of September.
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