Trade Recommendation: EUR/NOK
The Euro/Norwegian Krone pair started its bull run in October 2008 when it breached resistance of 8.50. The breakout ignited such strong momentum that the market went as high as 10.13905 in December 2008. From there, the market started to correct, and it closed at 9.71605 in the same month. In January 2009, the pair appeared to have lost its bullish steam as it could not get above 9.73675. As bears cemented their hold at 9.70 resistance, they used it to send the pair spiralling down.
Consequently, EUR/NOK generated consecutive lower highs and lower lows until it found the bottom at 7.24872 in August 2012. In less than four years, the Euro lost close to 30% of its value against the Norwegian Krone. After bottoming out, however, the pair started to flash signs of bullishness. Bulls tried to take out 9.70 resistance in December 2014, and even though they failed, they have created one higher low after the other in an effort to finally conquer 9.70.
Technical analysis reveal that the Euro/Norwegian Krone pair is in a very good position take out 9.70 and trigger an enormous cup and handle reversal pattern on the monthly chart. It is very important to note that 9.70 is the pair’s strongest resistance as it has stood the test of time. Therefore, bulls will certainly have a lot of trouble to claim that level. When they do, however, expect a surge of momentum as institutions, investors, and traders will most likely take notice.
The strategy is to buy the breakout at 9.70. If bulls take out the resistance, they will likely use it to move to our target of 11.90. The process may take more than a year.
Monthly Chart of EUR/NOK on Forex.com
As of this writing, the Euro/Norwegian Krone is trading at 9.66061 on Forex.com.
Summary of Strategy
Buy: Breakout at 9.70.
Stop: 9.47 after the breakout.
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