GBP/NOK

Nicole Elliott from Mizuho Corporate Bank at 10/29/09

Comment: October’s low at 8.8200, just above 1976’s record low around 8.2000, put Sterling close to its most oversold against Norwegian krone. Fairly sharp intra-day moves over the last two months suggest a major re-think and intermediate turn in the pound’s fortunes, here against one of this year’s best performers and against a raft of other currencies too. Yesterday’s close well above the ‘neckline’ of an inverted ‘head-and-shoulders’ has a first measured target at 9.8000 with a possible second squeeze to 10.1000 if enough momentum gathers. Note that moving averages have already turned positive and despite an impressive Ichimoku ‘cloud’ the Lagging Span has few candles to prevent it rallying strongly over the next month or so.

Strategy: Buy at 9.3750, adding to 9.2500; stop below 9.0000. Add to longs on a weekly close above 9.6000 for levels as above.