NOKEUR closes above its opening price after recovering from early selling pressure
Norwegian Krone/Euro (NOKEUR) Technical Analysis Report for Jul 31, 2020 | by Techniquant Editorial Team
NOKEUR finished the month 0.86% higher at 0.0933 after gaining 3 pips (0.32%) today. Trading up to 3 pips lower after the open, the currency managed to reverse during the session as bulls took control ending the day above its opening price. Closing within the previous day's range, prices failed to decisively move beyond the prior day's trading range.
Daily Candlestick Chart (NOKEUR as at Jul 31, 2020):
Friday's trading range has been 8 pips (0.86%), that's slightly below the last trading month's daily average range of 9 pips. Weekly volatility is also lower, being slightly below the market's average weekly trading range. The longer-term, monthly volatility is currently slightly lower than usual for NOKEUR.
During the whole day, prices traded within the previous day's range, unable to trade above the prior day's high or below the previous day's low forming an Inside Bar. After moving lower in the prior session, the forex pair managed to close higher but below the previous day's open, forming a bullish Harami Candle.
Buyers managed to take out the key technical resistance level at 0.0931 (now S1), which is likely to act as support going forward. After having been unable to move lower than 0.0926 in the prior session, the pair found buyers again around the same price level today at 0.0927. The last time this happened on Wednesday, NOKEUR actually lost -0.96% on the following trading day.
Though NOK/EUR is currently in a short-term downtrend, this might just be a correction, as both the medium and long-term trends are still bullish.
Buying could speed up should prices move above the close-by swing high at 0.0941 where further buy stops might get activated. Selling could accelerate should prices move below the nearby swing low at 0.0926 where further sell stops might get triggered. As prices are trading close to July's low at 0.0923, downside momentum could speed up should the FX pair mark new lows for the month.
Among the six market conditions that our pattern recognition engine identified today, the statistics for the OHLC Patterns based market condition "Bullish Harami Candle" stand out. While it is usually interpreted as bullish, it has actually shown to be bearish for NOK/EUR. Out of 85 times, NOKEUR closed lower 50.59% of the time on the next trading day after the market condition occurred. The optimal exit for swing trading this condition on the short side has been after 10 trading days, showing a win rate of 51.76% with an average market move of -0.22%.