Gold traders
have been in a period of indecision for the last few weeks, as indicated by the
pennant that has formed on the weekly chart above (Price converging from both
high and low to form the tip of a triangle). The fact that the rate was in a dominant
and pronounced downward trend prior to that is a signal that it will continue
in that direction as soon as the tip of the “pennant” is reached, according to
classical Technical Analysis theory.
Fundamentally,
the elections in Ukraine seem to have gone well. An apparently strong candidate
with good parliamentary experience has been elected president with a decisive
majority in the polls, or at least in those parts of the country where polls
were allowed to take place. That there seems to be a significant military
battle raging over control of the airport in the city of Donetsk is not comforting, but the
markets can be quite discriminating about matters such as this and the distinct
impression we get from our sources this morning is that the geopolitical crisis
that has been Ukraine is, for the moment at least, off the front burner as far
as those participants who have an interest in gold as a “safe haven” are
concerned.
The Norwegian Krone
The currency
of Norway is dependent on both the price of oil, that country being a significant
producer, and the interest rate differential against other countries. According
to a study by the Economics Department of Norges Bank, international financial turbulence
also has a disproportionate effect on the Krone, while in the long term its
value can change due to price differences between Norway and its neighbours.
We have
decided to make the USDNOK pair, known in the Forex market as one of the “Scandies”,
one to watch. We believe this is a good time to initiate coverage, given that
the international price of oil is relatively stable at present.
Right now
USDNOK is in a downtrend, signified by the lower highs and lower lows on the
daily chart above, and the fact that the rate is below the 200 Day Simple
Moving Average (SMA, blue curve on the chart).
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