Price action on the USD/NOK remains range-bound, as the main fundamental driver of this pair (crude oil prices) also continues to trade in the tight range found between the $62 – $66 price levels.
Analysts at TD Securities believe that April 2021 could see the presently “overvalued” Norwegian Krone finding its intrinsic value. This outlook may not be entirely out of place, as the crude oil prices are expected to weaken after the OPEC + alliance opted to start scaling back production curbs by May. This situation could leave the Krone vulnerable and may have implications on the trade direction for the USD/NOK.
The situation with the long-term bond yields in the US may also be an opposing factor to the crude oil fundamentals. The USD/NOK is trading 0.29% higher on a day which has so far shown low volumes on the pair.
Technical Levels to Watch
The USD/NOK continues to remain range-bound, with the 8.65723 resistance forming the ceiling of the range and 8.39643 holding its own as the range’s floor. In between these price boundaries, a pitstop area lies between 8.49028 and 8.55855. The price picture on the daily chart is that of a rectangle pattern, with the downtrend move preceding the formation of the rectangle.
The price resolution of this pattern is usually in the direction of the trend that enters the pattern. This sets up a chance for bears to initiate a breakdown of 8.39643, with the 8.29611 and 8.18807 support levels expected to be the prime targets for bears after the breakdown is complete.
On the other hand, a bearish resolution of the pattern could be negated if the bulls can send the pair above the 8.65723 price boundary. The uncapping of this ceiling would open the door for bulls to target the 8.80393 resistance barrier, with 9.04414 expected to be the price projection point of a move that needs to take out 8.90778 (1 December and 8 December 2020 highs) and 8.96834 (16 September; 9/23 November 2020 lows) to be actualized.
USD/NOK Daily Chart