USDNOK Testing Critical Support - USDSEK Stuck in Trading Range
NOK, SEK TALKING POINTS – WEEKLY TECHNICAL OUTLOOK
- USDNOK on edge of breaking through 1-year support channel
- USDSEK is looking like it will be wedged in last week’s range
- Fundamental outlook remains bullish despite downward moves
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USDNOK TECHNICAL ANALYSIS
USDNOK is currently wobbling on the edge of breaking below the lower lip of a one-year upward-sloping support channel (red lines). The last time the pair tested the resolve of the support was in mid-March, but it quickly bounced back and resumed its uptrend. The fact that the pair are shying away from breaching could signal that underlying bullish momentum remains strong.
USDNOK – Daily Chart
This is further reinforced when examining the close encounter of the second time. Zooming in on a four-hour chart – and highlighted within the yellow box – is an illustration of the pair’s lack of resolve. The candles themselves have small bodies that are accompanied by long wicks extending toward the lower bound. The lack of follow-through and confidence suggests traders are not yet ready to trade below this range.
USDNOK – Four-Hour Chart
Zooming out, a monthly chart shows that since March 1 2018, USDNOK has climbed over 12 percent and has steadily climbed along the rising support (red lines). The fundamental outlook combined with the lack of confidence in breaking below the lower bound signals underlying upward momentum remains robust. For this reason, it looks as if the pair will continue along the upward trajectory along this channel.
USDNOK – Monthly-Chart
USDSEK TECHNICAL ANALYSIS
As outlined in last week’s technical forecast, USDSEK appears to have found a new range between 9.2273-9.3110. The pair may experience some soft inter-range resistance with hard psychological borders on either side (red line, yellow line). Breaking above the upper bound with lasting follow through will be another bullish push for the pair and will reinforce the overall dominant uptrend.
USDSEK - Daily Chart
Zooming out to a weekly chart shows that since the start of last year the pair has risen over 16 percent and tested the January 2018 support several times, re-affirming confidence in its efficacy as a reliable support. For this week, the pair may continue to trade within this range, but upcoming unemployment data out of Sweden may push the pair higher if it disappoints.
USDSEK - Monthly-Chart
If USDSEK breaks and holds above 9.3110, it could bolster what already appears to be an upward-moving bias for the pair and push them beyond their 17-year high that was hit on March 7. The fundamental outlook for the pair and relative positions of monetary policy from each currency’s respective central banks also support the notion that the pair’s long-term outlook is bullish.
SEK, NOK TRADING RESOURCES
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--- Written by Dimitri Zabelin, Jr Currency Analyst for DailyFX.com
To contact Dimitri, use the comments section below or @ZabelinDimitri on Twitter
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.