The USD/SGD pair tried to break out during the course of the session on Tuesday, but as you can see the 1.34 level offered enough resistance to turn things back around and push the market lower. By doing so, we ended up forming a shooting star which of course is a very negative sign, and a possible double top. A doubletalk of course is a nice countertrend opportunity if we can break down below the bottom of the shooting star, I believe that we will then head down to the 1.32 area.
Further compounding the bearishness of this chart is the fact that the MACD is showing signs of divergence in the histogram. Because of this, I believe that we are starting to run out of momentum and that it’s only a matter of time before we start selling off.
Simple pullback could lead to profits
A simple pullback at this area could lead to profits. I don’t know that we’re going start falling drastically from here, even though there is divergence. However, I believe that we could very well see a pullback that offers a 200 pips opportunity. The Singapore dollar is certainly one of the more stable currencies in Asia, so really this point in time I don’t see any reason for it to sell off drastically. Yes, I understand that the US dollar is strong against almost everything, but at the end of the day I think that this market is in an uptrend basically because of how strong the US dollar is.
Of the other hand, if we break above the shooting star that would be an extraordinarily strong sign, as the market should then head to the 1.35 level, and then possibly the 1.40 level as breaking above a doubletalk and divergence would be a massively bullish sign. Because of that, I am very interested in seeing what happens over the next couple of sessions, as we may even have an opportunity to sell this market, and then turn right back around and start buying on signs of strength.
