The USD/MYR has produced more downward pressure in early trading today as support levels prove vulnerable.
Overconfidence can become a very dangerous character flaw within a new speculator. Short term success can create the feeling that all decisions are ‘golden’ and mistakes cannot be made. Experienced traders understand yesterday’s results does not mean that today will be successful. Speculators who have been selling the USD/MYR need to understand the seemingly easy trades within the forex pair as it enjoys a steady bearish trend will not continue forever.
However, I am not about to tell you to look for a sustained reversal higher. The USD/MYR has delivered steady downward momentum since late March when it was trading near the 4.4375 mark. As of this morning the Malaysian Ringgit is bouncing along near a value of 4.1440. The USD/MYR’s current price action is testing support levels it last traversed in early February of this year.
The USD/MYR has broken through important support and its trading early this morning produced a noticeable spike downwards to punctuate its bearish trend. Support near the 4.1400 is critical and if it is broken could produce a substantial test of a value range which occurred in January which saw a low water mark of approximately 4.0475. However, before the USD/MYR tests this mark it first must traverse territory downward that it has not seen since coronavirus fears began to weaken many emerging market currencies.
Speculators who want to continue to sell the USD/MYR cannot be faulted, but they should understand that reversals higher can develop which can go against their trading positions and destroy their positions. While the USD/MYR is a relatively stable emerging market forex pair and has a solid degree of transparency, its trading volume can become soft sometimes which opens itself to sudden volatility.
Selling the USD/MYR within its current price range of 4.4400 and 4.6000 is a speculative trade which carries risks. However, bearish momentum via technical movement does look alluring and the target of 4.1400 looks like a potential place the USD/MYR could logically aim for via institutional trading which uses software in the near term. Traders need to certainly use stop losses if they are selling and hoping to ride the bearish momentum. Resistance levels have been certainly decreasing incrementally too which make them harder to predict, but a stop loss near 4.1470 may be appropriate if a carefully chosen amount of leverage is being used.
Malaysian Ringgit Short Term Outlook:
Current Resistance: 4.1470
Current Support: 4.1400
High Target: 4.1550
Low Target: 4.1360
