USD/NOK traded slightly higher during the European session Tuesday, after it hit support at 8.470, near the upside support line drawn from the low of October 21st. For the most part, the pair has been respecting that line since and thus, bearing also in mind that the price structure remains of higher lows and higher highs, we would consider the short-term outlook to be positive.
We believe that the bulls may take charge again soon and perhaps push the action up to yesterday’s high of 8.570, or Friday’s peak, slightly below the 8.600 mark. That said, a break higher would confirm a forthcoming higher high and could pave the way towards the 8.645 barrier, marked by the high of October 6th, where another break could extend the short-term uptrend towards the 8.712 zone, defined as a resistance by the inside swing low of September 30th.
Shifting attention to our short-term oscillators, we see that the RSI, although slightly below 50, has started turning up again, while the MACD, despite lying below its trigger line, shows signs of bottoming near its zero line. Both indicators suggest that the rate may start gaining upside speed soon, which is inline with our view of a potential rebound soon.
In order to abandon the bullish case and start examining whether the bears have gained full control, we would like to see a clear dip below 8.470. This could confirm the break below the upside line drawn from the low of October 21st, and may encourage declines towards the 8.390 zone, marked by the low of November 1st. If that barrier doesn’t hold either, then we could see the fall extending towards the 8.320 zone, which acted as a strong support between October 22nd and 28th.
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