USD/NOK surged today, breaking above the resistance (now turned into support) barrier of 8.6800, marked by the high of March 28th, that way hitting a new one-month high. The pair has been in a steep rally mode since Tuesday, when it emerged above the prior downside resistance line drawn from the peak of March 8th. Therefore, we would consider the short-term outlook to be positive.
We would expect the bulls to take charge again soon and perhaps drive the action towards the 8.7300 territory, marked by an intraday swing low formed on March 11th. If they are not willing to hit the brakes at that level, then we may see them challenging the high of that day, at around 8.7500. That said, given that the recent rally appears overstretched, we believe that buyers may decide to take a a short break before they jump back into the game, perhaps allowing the rate to correct below 8.6800 and challenging yesterday’s high at around 8.6500.
Both our short-term oscillators detect upside speed. The RSI lies within its above-70 territory, while the MACD runs above both its zero and trigger lines, pointing up. However, the RSI has turned sideways within its above-70 zone and it could top soon, something which enhances our view for a minor corrective retreat before the next move north.
In order to start examining whether the bears have gained the upper hand in the short run, we would like to see a clear dip below today’s low, at around 8.6280. Such a move could see scope for declines towards the 8.5680 area, the break of which may pave the way towards the 8.5300 level, defined by an intraday swing low formed on Tuesday.
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