EURNOK Forex cross pair (Euro versus Norwegian Krone) has broken an all-time high again after months. A previous monthly demand imbalance gained control last June 2018, and this cross-pair has been rallying ever since.
Why has Norway’s Krone suffered the worst drop in half a century? By doing a supply and demand analysis on the monthly timeframe, we can see that the EURNOK forex cross pair was in a clear uptrend. There is no reason to go short; only longs are possible by following the big-picture monthly uptrend. We can see in the attachment a very strong monthly impulse around 10.35 at (1) that could eventually become an imbalance if the price continues like that.
As a short-term trader trading intraday on Forex, you will be able to trade short all the way down if forex selling signals start to happen. Longs will be possible much lower.
We don’t need to pay attention to Forex’s fundamental analysis if we are trading a supply and demand imbalances strategy and trading with the bigger picture trend. It’s taken for granted that if you trade the very small timeframes, fundamental analysis and news events will kick you out of the trade.
If you decide to read about Forex’s fundamental analysis, Norway’s central bank said it is ready to intervene after the bottom seemed to fall out of the krone market. The movements have been very large. The Norges Bank is considering whether they will intervene in the market by purchasing the Norwegian Kroner.
Norway is western Europe’s biggest crude oil exported. It’s being affected by the strong sell-off in crude oil prices.
All that can add an extra layer of complexity and help understand why EURNOK is rallying so strongly. The fact remains, though, the monthly timeframe was and still is in an uptrend, with new monthly imbalances being created with the previous one in control. Fundamentals? You don’t need them. The fury of the sell-off is unprecedented, but we knew that would happen by looking at the monthly timeframe and doing a supply and demand technical analysis.
Remember that a single timeframe is not enough to make a trading decision. You must put the new imbalances into context and only trade them if a multiple timeframe analysis has been done following supply and demand rules.
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