It’s forex trader lingo for the Norwegian Krone/Swedish Krona… and right now this obscure cross is setting up for a classic failed breakdown.
After undercutting key support in early May, it’s snapping back toward this level now. And with each passing day, it’s looking more and more like a bear trap.
We’re not just writing about this unheard-of FX pair to amuse you. Believe it or not, the currency pair carries valuable insights.
It’s one of our most trusted intermarket energy whisperers.
So it's no surprise the scoop-n-score setup in the NOK/SEK looks almost identical to the one in Crude Oil Futures:
Crude is working on its own bear trap — carving out a tactical reversal pattern just below a shelf of former support.
When NOK strengthens relative to SEK, energy tends to catch a bid. That’s no surprise considering Norway’s deep ties to oil exports. When crude is in demand, the Norwegian Krone typically is too.
And it’s not just a Scandinavian story.
NOK is powering higher against the US Dollar as well. Here it is, shown reversing out of a multi-year base dating back to 2021.
And if the Nokkie is ready to embark on a new uptrend, what are Norwegian stocks looking like? I’d say they look pretty good, with ENOR completing a base of its own.
I already know I’m interested because the Swedish Krona recently completed a trend reversal, and the two currencies tend to move together vs USD.
We bought EWD as we’re just itching for more European exposure.
And that brings us to today’s trade, the MSCI Norway ETF $ENOR:
ENOR is pressing up against a key retracement level near 27.50. We think the reversal is already in and want to use this area as confirmation. This way we can buy on strength.
ENOR is about 25% financials and 25% energy — as high of an oil & gas weighting as it gets for European equity markets. Norwegian banks have tracked strength in Europe’s financials, but the heavy energy exposure has been a drag, causing underperformance versus peers.
If energy catches a bid, the script will flip, and we’re gonna want some exposure to countries like Norway. It will be a natural leader in an environment where energy is back on trend.
We’re adding ENOR to our book of international positions. If it’s above 27.50, we’re in with an initial target of 32.00.
The hook in NOK/SEK, the reversal in ENOR and NOK, the bear trap in crude, the mean reversion play in energy... It’s all the same trade.
The commodity complex is showing signs of life. If these go, we don’t want to be caught on the sidelines.
We’ll be writing a good deal about commodities all week. I think it’s time to add exposure to this left-for-dead asset class.
Stay tuned and thanks for reading.
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