The Norwegian krone is booming: The strongest growth in the world.
International experts seems to have faith in the Norwegian krone, the NOK. They find it extremely cheap for the moment and expect it to be much stronger against the SEK (The Swedish krona) and the USD.
While many countries are forced to either limit their fiscal support or dramatically increase loans – both potentially negative signs of a currency, Norway may recover funds from investment abroad (through the use of the Oil Fund), which helps with the support of the Norwegian economy and the currency, the analysts write.
Let’s have a look at the charts and see if we can take advantage of the weak NOK right now.
USD NOK Tecnical Analysis
MONTHLY shows this pair has been steadily moving along an up trend line for a very long time, retracing and then moving upward, retracing and moving upward. It had an engulfing bullish candle up breaking the .270 at 10.82697 making 29539.1 pips and has now retraced back toward the trend line at 9.64395. The rsi is skimming just below the sell zone indicating there should be more up movement ahead, however it looks like it will retrace a bit more and then continue it’s journey back up. If it hits the .618 that would give 4705 pips. If it hits the .382 that would give 13070 pips.
DAILY shows this pair made a huge movement of 26755 pips and has retraced down 23,526 pips so far. It has crossed an up trend line and settled on the .270 at 9.70751. It looks like there is still some further down movement to come as the rsi, although in the buy zone, is strongly pointed down. When the rsi turns back up indicating it is ready to move up to the sell zone this should cause a gartley and the pair will move back towards the trend line – a small retracement then it should keep retracing to the 1.618 at 9.04371 giving 5997 pips and settling on the lower up trend line.
HOURLY shows this pair moving following a down trend line in a step ladder formation. It just formed an engulfing bear candle giving 784 pips, touching the 1.618 of the previous fib at 9.61186 and resting just above it . At the moment it looks like it is consolidating a bit, however with the rsi strongly in the sell zone and pointing down, it is ready to continue it’s down journey to the buy zone. If it reaches the .270 at 9.57345 of the current fib it will give 212 pips. If it continues to the 1.618 at 9.520060 of the current fib it will give 1125 pips.
February 12, 2020 Update
MONTHLY shows this pair inching up and down slowly upwards to the .270 at 9.45007 – 2,512 pips up. The rsi, however is in the sell zone and pointed down towards the buy zone and could show a movement down in the short term.
DAILY shows this pair has made a movement down crossing an up trend line, almost reaching the .236 but not quite. The rsi has just reached the buy zone but a look back shows this pair has a history of skimming along for quite awhile before it changes direction. This could indicate further movement down for this pair.
HOURLY shows this pair hit the 1.618 of the fib scale but just did not touch it, and made a nice movement up toward the down trend line and did not reach it either. The rsi is in the sell zone and is still pointing up, indicating there is more up movement to come yet. It looks like this pair will go up a bit yet and if it crosses the down trend line it will probably go to the .382 at 9.24592 – 202 pips up from the current position.
USD/NOK in the news
″(Norway’s) demographics and domestic medical infrastructure make it better equipped for the outbreak than many other countries, and its strong fiscal position puts it at a distinct advantage,” Goldman analysts, led by co-heads of global foreign exchange, Zach Pandl and Kamakshya Trivedi, said in the note on Sunday.CNBC
Short selling as recommended by Goldman Sachs analysts involves borrowing a currency while anticipating that its value would drop within a specified period. The borrowed funds are sold at the current market price. When the expected price drop happens, the short seller buys back the currency and pays back the loan. The profit is made from the depreciation within the specified period, according to Coinspeaker.
In a recent policy statement, Norway announced that it would further increase daily transactions from NOK 2.1 billion to NOK 2.3 billion in its quest to improve economic buoyancy.Coinspeaker
The Goldman Sachs team outlined that the Norwegian krone is best positioned for a sterling performance throughout the rest of the crisis. The krone presently trades at 9.68 to the USD. Its strength stems from the fact that while other countries limit their fiscal policy to borrowing, Norway focused on fund repatriation from its investments overseas.
The Norwegian krone declines sharply and had a phenomenal development last week, according to Nettavisen. “The strongest krone of them all lately,” is the title of the morning report to DNB Markets on Thursday. Since the base levels in March, the krone has strengthened by about 16 per cent against the euro and a full 20 per cent against the dollar.
There has been an increase in oil prices, which is closely linked to better sentiment in the markets. There is a little less skepticism about taking risks, which has led to stock market upswing.
A stronger krone, in isolation, means that the goods we buy from abroad are cheaper. It also becomes cheaper to vacation abroad when it opens up again for foreign travel. By contrast, Norwegian goods are becoming more expensive for foreigners, and a strengthened krone could be negative for Norwegian export companies.