The USD/SGD pair fell initially during the day on Friday, but as you can see the 1.40 level offered enough support to turn the market back around and form a hammer. This of course is a very positive sign, but right now I think overall we are simply trying to consolidate. That makes sense, because the 1.40 level is a large, round, psychologically significant number, and was significant resistance in the past. Now that we broke above there, the market is simply trying to build up the momentum to continue going higher. Also, you have to keep in mind that it is difficult to pick up any serious momentum at this moment in time, simply because we are at the very end of the summertime vacation. In other words, a lot of liquidity simply is not going to be in the marketplace.
Breakout
We did break out, and as a result I feel it’s only a matter of time for it go much higher. Once we get the liquidity back in the marketplace I feel that the US dollar will strengthen against the Singapore dollar, simply because the Singapore dollar is so beholden to the banking system and construction in the Asian region. The Singaporean banks are the financiers of construction projects and as a result they are suffering as the GDP of Asian economies continues to fall.
I think that ultimately this market probably reaches towards the 1.50 level, but it is going to take a bit of time to get there. I believe that pullbacks sooner or later will offer buying opportunities on supportive candles, and I will add to the position going forward. I think there is massive support all the way down to the 1.39 handle, so at this point in time I really don’t have any interest in selling this pair until we get a significant breakdown, something that I just don’t see happening at the moment. After all, the US dollar get beat up on Friday, but barely botched in this particular market.
