The correction lower in NOK/JPY saw prices completing a symmetrical swing with the last corrective move, into the 12.4275 level. Despite briefly piercing below the level, strong buying has since kicked in bringing price back above the broken long-term bull trend line.
For now, the bounce has stalled at the 12.8127 level resistance. However, a series of inside candles here suggests there is room for a further breakout higher. With oil prices stabilizing and finding demand once again, and with higher equities prices sapping safe-haven support from JPY, there is room for a continued push higher with a break of 12.8127 targeting a run up to 13.2788 initially.
What To Watch
Movements in oil prices are key for NOK and we are essentially looking at a risk on vs risk off pairing here. With this in mind, higher risk prices will support this trade, while any risk off action will favor lower prices.
The FOMC this week will be the big one to watch. If risk assets are impacted lower, this will likely negate this trade. However, if the Fed disappoints USD bulls, this could easily pave the way for a pop higher near term.