Scandinavian Countries Positioned for Currency Rebound

Name: Greg Holden

Email:

News in Sweden has recently added the possibility of a rise in consumer confidence as the Riksbank has extended its 50 billion SEK bailout program by an additional 6 months in order to ease lending throughout the country. The program is designed to add liquidity to banks feeling the crunch of the Baltic financial crisis. By extending this program, financial institutions will feel more comfortable about investing in business deals, but may also signify that national confidence about a speedy recovery from recession may actually have fallen; which could be telling about future monetary policy decisions, such as lending rates.

In other news, Denmark’s Krone has risen from its 15-day low against the USD, back towards 5.3300, and is forecast to continue upwards in the long-run. Not far off from this prediction is news that the Norwegian Krone may also experience long-term upward mobility. Many analysts have begun to anticipate a rebound in the NOK as its companies have experience profits lately, and falling oil prices have helped boost Norway’s exports by bringing its currency down in value. Despite continued ripples from the Baltic crisis, the Scandinavian countries appear poised for a rebound in the mid- to long-term.

USD/DKK 4-Hour Chart
usddkk-4hour-chart

- Above is the 4-hour chart for the USD/DKK by ForexYard.

- The indicators used are the Bollinger Bands, RSI, and Slow Stochastic.

- First indication to take note of is that the Bollinger Bands on this chart appear to be getting tighter, although they have not yet signaled that they are indeed tightening for a significant movement.

- Point 1: There is a clear bullish cross on the Slow Stochastic, signaling that the next movement will be upward.

- Point 2: The price bounced off the over-sold border of the RSI and is now in an upward direction. This takes some of the upward pressure off of the bullish cross at Point 1, but still indicates that the price ceased its downward movement.

- Point 3: The consolidation trend that has been taking place for the past few days is reaching its climax. This lends weight to the notion that the Bollinger Bands are tightening and also signals that a price jump may occur in the near future.

- For the time being, the price will likely correct upwards to the upper border of the consolidation trend, reaching as high as 5.3400 in the next few hours.