Since the beginning of the year the cross-pair, EURNOK, has simply done nothing meaningful! But it has been oscillating between two very distinct levels of support @ 8.1067 and resistance @ 8.5252, in a well defined range.
Can we take advantage of this? Yes, we can.
Having respected the support level on the 4th, price is now moving in the direction of the aforementioned resistance level. As part behaviour is anything to go by, if price does get to this level of resistance then we could potentially have a decent sell opportunity.
After all, price has already proven to us on multiple occasions that it is unable to break the level of resistance at 8.5252, based on the past three occasions (November 2013, January 2014, and July 2014). Furthermore, price has not been above this level since 2009. It is from this technical perspective that if price tests this level again, the bounce before a potential reversion back into the range looks more likely than the breakout to the upside.
More aggressive traders who feel price is likely to fall back into the range if and when price next tests this level of resistance could seek to take advantage of this by simply placing an order to sell in advance of the resistance level, with a stoploss above it.
This means that if price does have a whiplash rejection against the level (like it did in June 2014), then traders can benefit from getting into the move at the beginning rather than looking waiting for a price action based set-up. Based on what’s happened before, the market may not give us a price action based set-up before descending back into the range.
However, for the more risk adverse traders - they will require more confirmation and will typically wait for a price action based rejection at the level of resistance. This could be in the form of a bearish pin bar reversal (supported by a confluence of bearish reversal RSI or Stochastic divergence) and/or a reversal on the hourly timeframe.
Verdict: One for the watch list.
Price may not even get to the level. After all, nothing is ever guaranteed in financial markets. But at least if it does, we have an awareness of it in advance so we know how we could take advantage of it.
Can we take advantage of this? Yes, we can.
Having respected the support level on the 4th, price is now moving in the direction of the aforementioned resistance level. As part behaviour is anything to go by, if price does get to this level of resistance then we could potentially have a decent sell opportunity.
After all, price has already proven to us on multiple occasions that it is unable to break the level of resistance at 8.5252, based on the past three occasions (November 2013, January 2014, and July 2014). Furthermore, price has not been above this level since 2009. It is from this technical perspective that if price tests this level again, the bounce before a potential reversion back into the range looks more likely than the breakout to the upside.
More aggressive traders who feel price is likely to fall back into the range if and when price next tests this level of resistance could seek to take advantage of this by simply placing an order to sell in advance of the resistance level, with a stoploss above it.
This means that if price does have a whiplash rejection against the level (like it did in June 2014), then traders can benefit from getting into the move at the beginning rather than looking waiting for a price action based set-up. Based on what’s happened before, the market may not give us a price action based set-up before descending back into the range.
However, for the more risk adverse traders - they will require more confirmation and will typically wait for a price action based rejection at the level of resistance. This could be in the form of a bearish pin bar reversal (supported by a confluence of bearish reversal RSI or Stochastic divergence) and/or a reversal on the hourly timeframe.
Verdict: One for the watch list.
Price may not even get to the level. After all, nothing is ever guaranteed in financial markets. But at least if it does, we have an awareness of it in advance so we know how we could take advantage of it.
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