GBP/NOK tumbled yesterday, breaking below the 10.920 barrier, which is the lower end of the short-term sideways range that had been containing the price action since June 7th. The slide was stopped near the 10.850 zone, marked by the low of January 15th, where the rate oscillated for a while. In our view, the downside exit of the aforementioned range has signaled the resumption of the prevailing downtrend and that’s why we will hold a negative stance for now.
At the time of writing, the rate is attempting another dip below 10.850, and if the bears are strong enough to distance themselves form that barrier, then we may see them targeting the 10.770 hurdle soon, a support defined by the low of January 10th, also slightly above the low of the next day. If that level is not able to withhold the bear pressure, then its break may allow extensions towards the 10.700 zone, marked by the low of December 11th.
Taking a look at our short-term oscillators, we see that the RSI, already slightly above 30, has ticked down again, while the MACD lies below both its zero and trigger lines. Both indicators suggest that the downside momentum remains decent and support the case for some more declines in this exchange rate.
In order to start examining whether the bulls have gained the upper hand, we would like to see a strong recovery above the 11.030 obstacle, which is the upper bound of the aforementioned sideways range. Such a move would confirm a forthcoming higher high on the 4-hour chart and could initially aim for the 11.100 level, which provided decent resistance from May 29th until June 6th. That said, before we get confident on the next leg north, we would like to see a break above 11.132. Such a move could allow the bulls to put the 11.210 area on their radars, which proved a good resistance between May 16th and 21st.
