EUR/NOK failure bullish breakout, more potential longs unwinding

EUR/NOK may see further downside after a failure to break above its 11-year high.

Short-term technical outlook on EUR/NOK

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Key Levels (1 to 3 days)

Intermediate resistance: 10.1455

Pivot (key resistance): 10.1940

Supports: 10.0950, 10.0510 & 10.0030/9.0000

Next resistance: 10.2800

Directional Bias (1 to 3 days)

Bearish bias in any bounces below 10.1940 key short-term pivotal resistance and a break below 10.0950 reinforces a further potential drop to retest 10.0510 before targeting the next near-term support at 10.0030/9.0000.

However, a clearance with an hourly close above 10.1940 invalidates the bearish scenario for an extension of the corrective rebound towards 10.2800.

Key elements

  • The earlier bullish breakout seen in EUR/NOK above the previous Dec 2008 major swing high of 10.1775 in mid Oct 2019 did not have positive follow through; its price action reintegrated back below 10.1775 and ended with a weekly bearish “Shooting Star” candlestick pattern. These observations suggest a bullish exhaustion of the recent uptrend from Apr 2019 and advocate a potential bearish reversal (see weekly chart)
  • In the shorter-term as depicted on the 1-hour chart, it has started to evolve within a minor descending channel in place since 29 Oct 2019 high with the upper boundary/resistance at 10.1455 and lower boundary/support at 9.0000.
  • From the recent 11 Nov 2019 minor swing low area of 10.0450, it has staged a “bearish flag” ascending range configuration that tends to represent a potential dead cat bounce before another downleg resumes.

Charts are from eSignal

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