The USD/SGD trend remains clearly on display for technical traders. Strong bearish momentum in the forex pair has been experienced since late March. The Singapore Dollar has been testing support levels consistently and incrementally been busting through these lower levels steadily. Yesterday proved a big day for the USD/SGD as it broke through the 1.36000 barrier before having a slight reversal take place.
Financial institutions reacted to the US Federal Reserve policy statement with a fairly predictable wave of forex maneuvering yesterday. In anticipation of an extremely dovish statement from the US central bank the USD/SGD began to break through support and trade within vicinities not fully tested since January. However, as is often the case after a Fed statement is released; a reactionary reversal was experienced when the USD/SGD climbed slightly higher. Slightly being the keyword.
What makes yesterday’s move to low watermarks around the 1.35650 level ultra-intriguing is that when the natural counter-reaction occurred after the exuberant bearish selling, the move higher via buying of the USD/SGD did not break through technical resistance levels. Some traders may scratch their heads and ask what the technical resistance level areas are based on since the USD/SGD had broken through vital support and created a new trading range. In my estimation, the 1.36400 level looks significant.
The current price action for the USD/SGD is near the 1.36190 value. Short term resistance appears to be the 1.36280 region. If the USD/SGD can sustain its values within this value band and does not break through critical short term resistance today, speculators may believe the bearish trend for the Singapore Dollar will resume near term. Breaking support yesterday near the 1.36400 was significant as bearish selling became strong and volatile, and this juncture may prove to be important resistance near term now.
The surge downward in the USD/SGD yesterday was no accident; the values it traversed may prove to be an indicator that financial institutions believe the Singapore Dollar’s targeted value is closer to the 1.35700 to 1.35800 range in the foreseeable future. No, the forex pair didn’t sustain its values below the 1.36000 juncture yesterday, but the fact that it broke this level downward shows that the mark will likely be tested again if risk appetite globally remains steady.
Selling the USD/SGD continues to make sense. Speculators should use risk management tools carefully with selected stop-loss ratios. Risk reward parameters indicate fairly strong resistance above and vulnerable support levels below for the Singapore Dollar.
Singapore Dollar Short Term Outlook:
Current Resistance: 1.36280
Current Support: 1.36060
High Target: 1.36400
Low Target: 1.35800
