The downward correction saw prices complete a symmetrical swing with the last corrective move, at the 12.4275 level. Despite a brief dip below the level, significant buying has since pushed the price back above the broken long term uptrend line.
For now, the rebound has stopped at the resistance level of 12.8127. However, a series of interior candles here suggests that there is room for another breakout to the upside. With prices stabilizing and demand regaining, and with higher equity prices undermining the safe haven support of the JPY, there is room for a continued upward push with a breakout of 12.8127 targeting a rise to 13.2788 initially.
What to watch
Oil price movements are critical for the NOK and here we are essentially looking at a risk-on-risk-out pair. With that in mind, higher risky prices will support this trade, while any action against risk will favor lower prices.
This week will be the big one to watch. If risky assets are less affected, it will likely nullify this trade. However, if the Fed does disappoint the bulls, it could easily pave the way for a higher pop in the near term.
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