December might not be kind to Norway's crown
Nov 27 (Reuters) -Year-end liquidity issues can work against Norway's crown in December and the charts are already conspiring against the NOK.
The Norwegian crown had staged a healthy 3.8% recovery between Nov. 4 and Nov. 25 and, despite sharp losses versus the euro Monday and Tuesday, the NOK is set for a strong close on the month. This may not be repeated next month.
EUR/NOK based at 11.5200 on Monday, recording a bullish engulfing candle and a key day reversal. These are strong directional change signals. Tuesday's price action added confirmation to these signals. The rally from 11.5200 to 11.7210 met a minimum correction level taken off the 11.9930 Nov. 1 high to 11.5200 Nov. 25 low. The 50% and 61.8% Fibonacci retracement levels provide reversal targets at 11.7565 and 11.8123.
Two above-market Ichimoku cloud twists are on the radar and could pull price higher. The Dec. 2 and Dec. 23 cloud formations have parameters of 11.8055-11.8065.
The Viking cross is also adding weight to the bearish NOK call for December. NOK/SEK has fallen sharply from 1.0200 to 0.9831 in four days and looks set to challenge the 200-day moving average, currently at 0.9816.
There is a fundamental loose cannon that could change the NOK's fortunes in December and that is the size of any European Central Bank rate cut. A larger 50-basis point move could limit EUR/NOK gains.
For more click on FXBUZ
EUR/NOK daily candle chart: https://tmsnrt.rs/4eNX5DR
NOK/SEK daily candle chart: https://tmsnrt.rs/3Zp9J7S
(Peter Stoneham is a Reuters market analyst. The views expressed are his own)
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