EUR/NOK falls to 4-month lows; near oversold levels.
EUR/NOK declined fiercely after it touched a nine-year high of 9.9912 on December 21. Then in early February, the market managed to recoup some of its losses, but its efforts were not sustainable, and prices reversed direction again to reach a four-month low of 9.4709 today.
The RSI is currently increasing negative momentum in bearish territory below 50 and is a breath above-oversold levels, hinting that the market’s downtrend could be overextended. Stochastics have already posted a bullish cross in oversold area and are now heading to the upside; therefore, we cannot exclude any upside movements in the short-term. MACD gives further negative signals, trending below zero and its red signal line.
Should the market stretch lower, traders could look to the 9.4350 level to provide support, a previous resistance-turned-support handle. If the market fails to hold above it, the next target could come between 9.3860 and 9.2939, an area which has been also frequently tested in the past.
On the flip side, a rebound could meet the 20-day simple moving average at 9.6141, eyeing the red Tenkan-sen and the 50-day SMA which are also in the neighborhood. A leg above from here could increase positive sentiment especially if the market enters again the Ichimoku cloud, opening the way towards last week’s high of 9.7265. In the best scenario, prices could cross above the cloud to reach 9.7746.
Regarding the medium-term performance, EUR/NOK has been painting a bearish picture since it fell below the 50-day MA. If the pair manages to end the day below the 200-day MA for the first time in a year, negative momentum could accelerate, increasing the quality of the bearish picture.
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