USD/NOK changes in favour of bullsThe US Dollar has appreciated substantially against the Norwegian Krone, jumping more than 80% within the last eight years. The ultimate high was reached in January 2016 when the pair managed to push up to the 8.9682 mark. Subsequently, the Greenback traded lower and entered a long-term consolidation period that confined the price in the 8.8000/8.0000 territory. However, the rate’s slight steepness downwards resulted in the formation of a falling wedge that has already provided three confirmations on each side.
Currently, the rate has reached the bottom boundary of the wedge pattern and is flashing some strong signals to a possible appreciation within the following months. Starting from technical oscillators located in the strongly oversold area and MACD being at an historical low, ending with the 23.6% Fibonacci retracement and a Gann period line (drawn from 8.9682) situated near the current price level. It should be noted that the former taken from the ultimate low to high (at 4.9585 and 8.9682, respectively) has worked effectively at identifying possible areas of reversal. Even though trend indicators are still demonstrating the prevalence of a relatively strong down-trend, it is likely that the rate has not simply recovered from the latest monthly plunge of almost 8%.
In terms of a possible upside target, the US Dollar may shoot up as high as the 8.6000 mark where an intersection of the upper wedge boundary and a Gann period line is located. Moreover, the 55-, 100- and 200-day SMAs are likely to be situated in the same territory at the time.
Moving on to the hourly chart, it is apparent that the USD/NOK exchange rate is trading in a channel down in force since early July. The rate failed to hit the bottom wedge boundary and thus reversed in the middle of the pattern. In case the rate manages to reach the upper channel line, it may function as a strong signal that a breakout to the upside may be due.
By and large, daily technical indicators were rather clear in terms of the rate’s long-term appreciation; thus, the senior channel down is expected to be breached within the upcoming trading days. The price moving above the 100- and 200-hour SMAs may function as the necessary confirmation that this upward momentum is not a temporary correction, but a start of an intermediate up-trend.
