EUR/NOK Looks to Be Heading Towards Key Support
|EUR/NOK traded lower on Wednesday, breaking below the 9.942 barrier, marked by the lows of Monday and Tuesday. The pair is trading below a tentative downside resistance line drawn from the high of August 7th, but we prefer to wait for a decisive dip below 9.906 before we start examining the case of a bearish reversal, as that zone acted as a decent support on August 9th, 13th, and 14th. For now, we will stay sidelined.
As we already noted, a decisive break below 9.906 could signal a bearish reversal on the 4-hour chart, allowing initial declines towards the low of August 5th, at around 9.879. Another dip, below 9.879, could set the stage for larger declines, perhaps towards the 9.834 hurdle, which acted as a strong resistance back on June 6th and 11th. It is also near the inside swing peak of July 31st. The bears may decide to take a break around that area, thereby allowing a small bounce. Nevertheless, as long as such a rebound stays limited below the 9.906 zone, we would remain negative. The forthcoming slide may lead to a dip below 9.834 and could open the path towards the 9.787 obstacle, defined by the low of August 1st.
Looking at our short-term oscillators, we see that the RSI turned down after hitting the crossroads of its respective downside resistance line and the 50 level, while the MACD lies slightly below both its zero and trigger lines. Both indicators suggest that the momentum is negative, but we repeat once again that we prefer to wait for a clear and decisive dip below 9.906 before we consider a negative short-term picture.
On the upside, a clear break above 10.000 would also bring the rate above the aforementioned downside line, which may be the greenlight for the bulls to drive the battle higher, probably towards the peak of August 15th, at around 10.046. If they overcome that barrier as well, then we may see them putting the 10.095 hurdle on their radars. That level is defined as a resistance by the high of August 7th.
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