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USD/MYR Forecast: Ringgit Hits Critical Level

By Christopher Lewis
Christopher Lewis has been trading Forex and has over 20 years experience in financial markets. Chris has been a regular contributor to Daily Forex since the early days of the site. He writes about Forex for several online publications, including FX Empire, Investing.com, and his own site, aptly named The Trader Guy. Chris favours technical analysis methods to identify his trades and likes to trade equity indices and commodities as well as Forex. He favours a longer-term trading style, and his trades often last for days or weeks.
  • The Malaysian ringgit has experienced a significant decline in recent days, prompting a reevaluation of the market's trajectory.
  • The 61.8% Fibonacci retracement level near 4.44, originating from the February 2023 swing, is now being tested.
  • This level is crucial as it may hold substantial market memory, making it a critical point to watch for potential reversals or further declines.
  • Longer-term Fibonacci retracement levels may serve as valuable guides for understanding future market movements.

If it doesn't hold here, it'll be interesting to see what happens next. And I would use the candlestick from the previous session on Monday as a sign that we are going to do a complete round trip that would have the 4.40 level violated to the downside on a daily close. It certainly looks horrific. And I think at this point in time, you have to understand that money is being repatriated into Asia.

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So, this might be a little bit of a knock on effect from the carry trade being closed out in Japan. Regardless, we are in a situation where if the Federal Reserve doesn't cut or doesn't cut as aggressively as people have been begging for, this pair will spike to the upside and probably hit 4.65 quicker than you can imagine.

If the Fed Cuts Aggressively

USD/MYR Forecast Today 07/8: MYR Hits Critical Level (graph)

On the other hand, if we see the Federal Reserve cut drastically, we could break down below the 4.40 level. Perhaps going back down to the 4.22 level. It's in that area. Then I think longer term institutional investors and I stress the word investor could probably get involved. That would make a nice target for the short sellers. But quite frankly, this is an oversold market, and therefore I think you've got a scenario where it is probably only a matter of time before we get a bounce. Clearing the 4.50 level to the upside is probably your sign that a long trade has set up in this market.

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Christopher Lewis
Christopher Lewis has been trading Forex and has over 20 years experience in financial markets. Chris has been a regular contributor to Daily Forex since the early days of the site. He writes about Forex for several online publications, including FX Empire, Investing.com, and his own site, aptly named The Trader Guy. Chris favours technical analysis methods to identify his trades and likes to trade equity indices and commodities as well as Forex. He favours a longer-term trading style, and his trades often last for days or weeks.

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