What we are seeing on the price of oil could be just the appetizer of what lies ahead. If the Brent will end 2014 below 90 (now at 70), then we will get the formalization of a bearish break of considerable importance as a five-yearly trend will be interrupted. We do not know where we could get yet, but as soon as the market will start working on the formation of a bottom, we will be able to estimate it thanks to the intermarket analysis. USDNOK is very helpful in this.
As we can see from the chart, from 2000 onwards, the two variables have followed the same trend and the recent weakness of the Nok (reached 7.00 area against the US dollar) has been accompanied by a similar drop of the Brent (in the upper panel on inverted scale). On the Norwegian krone we have already offered investment ideas on several occasions http://www.smarttrading.it/1/id_7280/Unidea-diinvestimento-inScandinavia-.asp and in less than a month are already producing a potential profit of 3%. What we want to emphasize, however, is the cyclical nature of the movement of USDNOK and therefore probably of the Brent. With an enviable precision USDNOK tends to alternate between primary tops and lows every 31 quarters with the next event (which should be a maximum) provided between the first and second quarter of 2016 (graphic source: Bloomberg).
As we can see from the chart, from 2000 onwards, the two variables have followed the same trend and the recent weakness of the Nok (reached 7.00 area against the US dollar) has been accompanied by a similar drop of the Brent (in the upper panel on inverted scale). On the Norwegian krone we have already offered investment ideas on several occasions http://www.smarttrading.it/1/id_7280/Unidea-diinvestimento-inScandinavia-.asp and in less than a month are already producing a potential profit of 3%. What we want to emphasize, however, is the cyclical nature of the movement of USDNOK and therefore probably of the Brent. With an enviable precision USDNOK tends to alternate between primary tops and lows every 31 quarters with the next event (which should be a maximum) provided between the first and second quarter of 2016 (graphic source: Bloomberg).
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