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Main » Articles » Scandi daily

Scandi Daily 12.18

OVERVIEW – As expected, any relative strength seen in the NOK on Wednesday was easily negated in Thursday trade, with the broad based USD rally forcing the a heavy bout of liquidation from long NOK positions. The surprising decision by the Norges Bank to raise rates by another 25bps to 1.75% had initially propped the single currency, but the broader global macro price action and shift in USD sentiment proved too much to ignore and a major double bottom formation (see below) was triggered in Usd/Nok on Thursday. Also seen weighing on the krone was some cross related selling in Nok/Sek ahead of some much talked about barriers at 1.2500 and 1.2550. Swedish unemployment data came in much stronger than expected, while Norwegian unemployment was bang on consensus. Looking ahead, there are no scheduled releases in the region on Friday and the markets will continue to cue off the broader price action in the currency market. Our technical studies point to additional weakness in the Scandis, both against the USD and the Euro over the medium-term.

scandical12.18


Eur/Sek pullbacks should be well propped ahead of 10.15 with the market in the process of carving a meaningful base on the daily chart. Latest price action reaffirms outlook with the market finally taking out the multi-day consolidation highs by 10.53 to now expose 10.60-70 further up.

Eur/Nok price action confirming our constructive outlook and we favor of a bullish resumption back above key short-term resistance at 8.57 over the coming days.  A closer look at the daily chart reveals the potential formation of a major bottom. Ultimately, only below 8.24 negates.

Usd/Sek our view is highly constructive at current levels and favors continued USD appreciation over the coming weeks.  We contend the market is attempting to carve out a major base rather than in the process of some bearish consolidation. The recent break back above 7.20 confirms bias and exposes 7.40-50 further up. Any setbacks are expected to be well supported ahead of 7.00.

scandi12.18


Usd/Nok double bottom has now been triggered and the break above the neckline is significant as it confirms that a major bottom is now in place. The push above 5.85 now opens a measured move extension back towards the 6.10-15 area over the coming days. Look for any dips to be well supported now ahead of 5.70. 

Gbp/Nok recovery rally has pulled back since reaching 9.53 in the previous week, but our outlook remains constructive, and a higher low is now sought out above 9.00, ideally by 9.23, ahead of the next upside extension beyond 9.53.

Nok/Jpy has been well confined to a very choppy range trade over the past several weeks, largely defined between 15.00 and 16.50. Pullbacks have once again been well supported in the 15.00 area ahead of the latest bounce back into the range. From here, we recommend continuing to play the range high-lows.

 

Written by Joel Kruger, Technical Currency Strategist for DailyFX.com
If you wish to receive Joel's reports in a more timely fashion, e-mail
jskruger@fxcm.com and you will be added to the "distribution" list.

Category: Scandi daily | Added by: forex-market (2009-12-18)
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