Swedish and Norwegian Kroner in Position to Gain Big!

By Greg Holden – Headline news this week seems to be the expectation of a vastly improving Swedish Krona. Analysts and investors from large firms such as UBS AG, UniCredit SpA, Danske Bank A/S, and Deutsche Bank AG all suggest going bullish on the SEK through the first and second quarters of 2010.

The logic behind this sentiment is the understanding that the SEK is undervalued, that its exposure to the Baltic region has finally been contained, and that its economy should pick up faster than others once demand for manufacturing goods picks up.

After dropping against the EUR to over 10.50, it has swung back up against the 16-nation currency and currently trades near 10.37. A few investment firms estimate that the SEK’s value should climb at least 3.3% against the EUR in the first quarter of 2010 alone.

Similar sentiment remains present around the Norwegian Krone as well. The NOK has held its ground as one of the stronger regional currencies throughout the past two quarters. In fact, Norway is the only country to raise interest rates while others are holding theirs at record lows.

With commodity prices rising, and Norway’s economy being directly linked to crude oil prices, the logical step isn’t that hard to make. The NOK remaining bullish is actually being called the one “sure thing” investment of the first quarter of 2010 by many investment firms and other forex analysts.

Technical Analysis

– The chart below is the daily USD/SEK chart by ForexYard.

– The indicators used are the Bollinger Bands, the Relative Strength Index (RSI), and the Stochastic (Slow).

– Point 1: The Bollinger Bands appear to be tightening on the chart, indicating a volatile movement is expected in the days ahead. Also, the price is in a downward posture and the next significant resistance line is just above 7.1000.

– Point 2: The RSI has recently exited from the over-bought territory and is cascading downward, indicating a level of downward momentum.

– Point 3: The Stochastic (Slow) is also showing the price moving in a downward move, highlighting the strength of the bearish momentum.

Forex Market Analysis provided by Forex Yard.

© 2006 by FxYard Ltd

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