By Greg Holden – The Scandinavian currencies all seem to be gaining ground on their European and American counterparts. The Swedish Krona may be the exception, however. Although the SEK has made substantial gains versus the US Dollar, it has continued to struggle against the EUR as regional concerns continue to mount.
Amid the turbulence coming out of the Euro-Zone and Britain, few seem to have taken note of the strong bullish channels which the Scandinavian currencies have experienced over the past two weeks. Oil prices have been relatively stable, despite last Friday’s sharp drop and today’s rebound. This stability has helped maintain the strength of the Norwegian Krone, one of the world’s primary commodity-linked currencies.
Denmark’s recent struggle with matching discount rates with a closer Euro-Zone integration has put a strain on the DKK, but its trends have mirrored those of the NOK rather closely regardless of these concerns.
The Scandinavian regional economy has gained from recent surges in risk appetite, and held steady despite the appearance of risk aversion in Monday’s trading. There seems to be a general sentiment that the Kroner will continue to post advances so long as the Euro-Zone’s stability remains uncertain.
Technical Analysis
– Below is the USD/NOK 4-Hour chart by ForexYard.
– The indicator used is the Stochastic (slow). A Fibonacci Retracement grid was also superimposed on the chart.
– Point 1: The pair has been trading in a range between 5.8180 and 6.0400, but there is a possibility that it has just breached the 50% retracement level and could now experienced a sharp downward movement.
– Point 2: On the other hand, the Stochastic (slow) shows a fresh bullish cross and the current price is visibly at a very strong support level. The amount of upward pressure could push this pair back up into a correction.
– Traders should watch this pair closely. Any indication of a major breach below the 50% line could mean a sustained downward movement is impending. But if the pair continues to waver at its current support line then we can expect to see an upward correction.
USD/NOK 4-Hour Chart
Forex Market Analysis provided by Forex Yard.
© 2006 by FxYard Ltd
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