Since the end of the July the USDNOK has been moving in an expanding range. That range expanded in late September as the USD surged against the NOK, but the price has continued to channel in a large range since.
The range is defined by swing highs in September and October at 8.6007 and 8.59803. In this pair that is virtually the same price, as 20 pips in this pair is about the same as 2 pips in the EURUSD. So 8.6 is the resistance region to watch going forward, and as of November 4 the price isn’t too far away.
The swing lows for September and October are 8.0366 and 8.0370. 8.0366 (area) is range support.
The overall trend is up, but how the price acts at resistance/support will give clues as to whether that long-term uptrend continues, the price ranges, or the trend breaks lower.
With the price near resistance the we are watching to see if the price can break above the top of the range. To help confirm the continued uptrend it will need to be an aggressive breakout. Edging past the former highs isn’t significant, and could draw in a lot of selling interest from traders expecting the range to continue.
A major breakout indicates the price could head to a target of 9.13. This is based on the approximate height of the current range added to the breakout price.
A weak break above resistance and a decline back below it could indicate a false breakout. If the price stalls just below resistance and then starts to drop again that could also signals a further decline. If that decline starts the logical target for the sell off is the bottom of the range–support at 8.0366. That doesn’t mean the price will end up going there. Analysis needs to be updated as new information becomes available.
Right now though, based on the price action, the upside target is 9.13 for an upside breakout or 8.0366 if the price fails to break resistance. This makes this price area one of high interest to traders.
Resistance isn’t a precise level, rather it is an area. So buy/selling exactly at former resistance isn’t necessarily the best play. Let the price action play out around resistance. Wait to see what happens. Monitor for strength or weakness. Then await a trade trigger which indicates a bigger move–either up or down–could be starting. This could a breakout of a small hourly-chart range in the vicinity of the resistance.
For major news items this week there is US non-farm payrolls on Friday. Whether the price has already broken out or not, that report could be a game changer. How the market reacts to it will provide a big price move which will help assess whether the range, or trend, is going to continue.