When it comes to emergency currency, every ordinary investor immediately thinks about the Swiss franc. This conclusion is also absolutely understandable. Switzerland has always been independent and has stayed away from important decisions of world history
According to many experts, the eurozone is quickly turning into a transfer union, in which Germany and France must bear the debts of member countries. This negatively affects not only the economy but also the sole currency.
In the foreseeable future, the situation is unlikely to change dramatically, so investors are trying to convert their Euro assets into more reliable currencies. One such protection is considered to be the Swiss franc. But in reality, the currency is greatly overvalued.
In 2019, government bond yields fell by 0.11%, while high demand and limited supply make the franc an instrument for speculation.
Since the currency depends so much on the actions of the national bank, it is not difficult to guess that serious speculation and political interests are behind the hype. Although officially Switzerland does not participate in international conflicts, it does not hesitate to profit from them.
All this leads to the reasons why investors are increasingly starting to pay attention to the Scandinavian currencies, and especially to the Norwegian krone.
From 1999 to 2019, the Norwegian economy grew, the country has a positive trade balance and has one of the highest GDPs in the world. At the same time, many investors working with technical indicators are afraid to invest in the Norwegian krone due to the currency’s pegging to oil.
This precaution cannot be called inaccurate, but it offers excellent opportunities for a quiet entry into the market. In 2000-2010, the CHF/NOK pair was frankly uninteresting, but the more the eurozone swings, the more attractive this instrument looks.
Since in 2011 the Swiss Central Bank refused to peg to the euro, the pair CHF/NOK should be considered starting from today. An interesting fact is that the average exchange rate of 8.5 NOK for 1 franc.
This is the golden mean to which the pair constantly strives and from which all the fluctuations in the exchange rate occur. Such a benchmark is very convenient for traders since it allows to easily determine the current trend. The trade corridor ranges from 8 to 8.8 NOK per franc.
As of July 2019, the exchange rate was in the upper price range. There were several reasons for this – a sharp drop in oil prices, which weakened NOK and tightened Swiss monetary policy.
Nevertheless, by the beginning of August, the oil price began to grow rapidly, which led to a leveling out of the situation in the CHF/NOK pair and a reverse trend reversal.
Such stable volatility was ignored by most traders who concentrated their efforts on trading classic pairs. This, in turn, makes the CHF/NOK trade less speculative and subject to artificial pressure.
To get a good profit, you need to learn how to wait. Sometimes the pair shows high volatility and makes fluctuations in the trading corridor during the week, in other periods it takes 2-3 months.
With such a pace, talking about scalping or the ability to quickly make several super-profitable transactions is not reasonable. On the other hand, the trader gets low risks.
Given the rather long-time ranges, the pair is recommended for use by investors with large capital since the profit is received on a one-time basis and in full.
Also, such transactions are associated with a high load on the psyche. Therefore, it is only suitable for experienced traders who know how to keep emotions in check. Any rushed decision will inevitably lead to large financial losses.