USD/NOK breaks large scale pattern

Source: Dukascopy Bank SA


Since the start of August, the USD/NOK traded in a large scale channel down pattern. Most recently, starting from October 20, the rate had been recovering in the borders of the large pattern. It was recently spotted that the recovery was taking place in a smaller scale channel up pattern.

On November 9, the lower trend line of the smaller pattern together with the 50-four hour period simple moving average provided enough support for the pair to surge up to the upper trend line of the larger pattern.

On Wednesday, November 10, the release of the US Consumer Price Index data caused an all out USD surge. On the USD/NOK charts it resulted in a piercing of the long term trend line. Namely, the underlying consumer demand for the US Dollar had increased, which signaled that the long term trend could be over. The end of the descent of the USD against the NOK was confirmed later on, as the pair clearly passed the resistance of the long term pattern in a 650 base point or 0.75% move over the span of one hour.

In the case that the surge continued, it could be slowed down by the upper trend line of the channel up pattern. Afterwards, the rate could face the resistance of previous high level zones near 8.7000, 8.7800 and 8.8300.

However, a potential decline of the pair would most likely find support in the lower trend line of the channel up pattern and the 50 and 200-four hour simple moving averages. Below the SMAs, the late October low level might act as support near the 8.3000 level.
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