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USDNOK & EURNOK Charts Bearish Patterns; EURNZD Drives 3 Year Highs

USDNOK & EURNOK Charts Bearish Patterns; EURNZD Drives 3 Year Highs

2018-09-12 15:56:00
Jeremy Wagner, CEWA-M, Senior Strategist
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The technical patterns on USDNOK and EURNOK depict some bearish patterns. The preferred position is short USDNOK and EURNOK while remaining long EURNZD (from Aug 29).

Longer term Elliott Wave pattern for USDNOK

The longer-term Elliott Wave pattern in USDNOK from the January 2016 high appears to be an Elliott Wave complex correction lower. This pattern has been mostly contained the within a downward price channel. USDNOK has effectively created a lower high and lower low since testing the upper bounds of this channel in August 2018.

Therefore, we have enough technical evidence to trade a bearish stance against the recent swing high. There is some technical support near the blue support line near 8.21-8.22. Conservative traders may want to wait for a break of this level to confirm the resumption of the downtrend.

Short USD/NOK Trade Idea

Short Entry: 8.24

Stop Loss: 8.47

First Target: 7.96 (Risk to reward ratio 1 to 1.2)

Second Target: 7.63 (Risk to reward ratio 1 to 2.6)

USDNOK price chart with elliott wave labels forecasting a continuation of the bearish trend.

EURNOK shorter term patterns clearer

The longer-term pattern for EURNOK is not as clear as USDNOK. I can see longer-term bearish patterns, like a thrust from a triangle from July 2017 to Dec 2017 high. A bullish possibility is that near term prices are correcting lower in wave 4 of an ending diagonal that should hold above 9.00. However, the near term technical picture for EURNOK is bearish as trend line support was just broken earlier today.

Short EUR/NOK Trade Idea

Short Entry: 9.58

Stop Loss: 9.67

Target: 9.41 (Risk to reward ratio 1 to 2.8)

EURNOK daily price chart with technical levels included.

EURNOK selling trading idea forecasting a bearish trend due to trend line break.

Remain long EURNZD

The long position for EURNZD was triggered on August 29 as NZD was breaking down. We moved the stop loss higher to 1.75 on September 4 while EURNZD continues to punch 3 year highs. As described in Monday’s webinar recording(34 minute mark of the video), when you are in a strong trend that continues to break higher, manually move the stop loss up to the next swing low.

Our viewpoint on EURUSD is that it is rallying in a larger corrective wave that may last for several weeks or months. NZD has been especially weak lately. Therefore, pairing EUR against NZD may have medium term potential.

In the case of EURNZD, we are continuing to hold the long EURNZD position but will adjust the stop loss higher to 1.76 to lock in at better than break even. Though this trend is strong, we will head to the exits at 1.80 as there is a bit of congestion in this price zone from back in 2015.

EURNZD reaches 3 year highs in a strong up trend.

Original EURNZD Trade Idea

Long Entry: 1.7570

Stop Loss: 1.7354 (**we are moving this to 1.7600 today)

Target: 1.8000

Risk to Reward Ratio 1 to 2

We studied millions of live trades to find what makes some traders successful over others. Risk to reward ratios was a common trait so we used that in our Traits of Successful traders research.

Elliott Wave Theory FAQ

How does Elliott Wave theory work?

Elliott Wave Theory is a forex trading study that identifies the highs and lows of price movements on charts via wave patterns. Traders often analyze the 5-wave impulse sequence and 3-wave corrective sequence to help them trade forex strategically. We cover these wave sequences in our beginners and advanced Elliott Wave trading guides.

New to FX trading? We created this guide just for you.

---Written by Jeremy Wagner, CEWA-M

Jeremy Wagner is a Certified Elliott Wave Analyst with a Master’s designation. Jeremy provides Elliott Wave analysis on key markets as well as Elliott Wave educational resources. Read more of Jeremy’s Elliott Wave reports via his bio page.

Do you agree/disagree with Jeremy’s Elliott Wave count above? Include your comments and Elliott Wave chart in the comments section below.

Discuss this market with Jeremy in Monday’s US Opening Bell webinar.

Follow on twitter @JWagnerFXTrader .

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