Just like the chart of the Dollar Index (DXC) - there is some sideways consolidation taking place presently in USD/NOK. This should be expected as generally speaking USD/NOK and DXC move in tandem.

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USD/NOK 2-hour chart:

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The wave count in USD/NOK suggests that once Wave ii is complete price should push lower towards 5.6000/5.4000.

Given that Inter-Market Analysis is the core of our IPA Trading Pyramid we need to make sure that related markets confirm this wave count. Generally speaking crude oil prices are a solid barometer for USD/NOK given Norway's large oil export market. However, as the overlay chart below shows, oil and USD/NOK have not had a very clear correlation in some time.

USD/NOK vs. Crude Oil:

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So while that inverse relationship may not be strong right now (correlations are always in flux), as long as crude oil prices remain within a trend higher, that should provide enough of a backdrop to support lower levels in USD/NOK. Based on our wave count, crude oil is approaching some key support and should turn higher with the $115/bbl the immediate target.

Crude Oil 2-hour chart:

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Certainly other risk related markets like the S&P 500 will be a useful inter-market analysis barometer as well, but for now, there is a somewhat incomplete scenario developing. That is not to say a short in USD/NOK does not make sense, one just needs to be aware that all of the pieces that support the trade are in place.....yet.

For more from Dave, visit Aspen Trading for more updates.