USD/SGD: Singapore Dollar Entering Fresh Technical Range

The Singapore Dollar has delivered robust strength early this week as risk appetite has grown globally and it is now within a technical range which needs to be carefully considered.

The Singapore Dollar is trading near the strongest part of its value range since relatively early in March. The current range of the USD/SGD may indicate to some traders that its the trend and therefore has been a one-way avenue, but this would be considered very wrong by experienced technical traders. Only two days ago, the USD/SGD found a sudden burst of buyers and challenged important resistance near 1.3990. However, the reversal downwards which took place after hitting these weaker values has proven eye-catching.

After attempting a short squeeze in order to push sellers of the USD/SGD out of their positions, known resistance held its ground.  The strength of the resistance may have inspired additional sellers of the USD/SGD to enter the forex pair and speculate the Singapore Dollar would gain value.

Early trading today is challenging dynamic support levels. The juncture of 1.3860 to 1.3870 appears attractive as support because the USD/SGD has not broken these boundaries since early March. A volatile flurry of trading in early March caused the USD/SGD to test a support level close to 1.3770 before finding a large amount of buying, which decreased the value of the Singapore Dollar swiftly as concerns about Coronavirus grew and global traders reacted to the US Federal Reserve and its policy mandates.

While current risk appetite looks significant and investors appear to be patting themselves on their shoulders for jobs well done, experienced traders may remain skeptical about the idea of one-way trends and golden days forever. The current support level for the USD/SGD may prove like a reasonable pivot point to test the recent strength of the Singapore Dollar and actually buy the US Dollar against it.

Short term trading is different than a mid-term perspective and outlook. Traders need to understand you can have a positive outlook for the Singapore Dollar and believe it may continue to pick up strength in the months ahead, but in the short term – a one or two-day outlook – believe the currency may be vulnerable and face a sudden trading reversal within an understood technical range which can cause temporary weakness. Buying the USD/SGD because of this speculative insight could prove worthwhile short term.

Singapore Dollar Short Term Outlook:

Current Resistance: 1.3890

Current Support: 1.3860

High Target: 1.4000

Low Target: 1.3770

USD/SGD

Robert Petrucci
Robert Petrucci has worked in the Forex, commodity, and financial profession since 1993. Important aspects of his work involve risk analysis and advisory services. As an advisor in a Family Office he maintains a conservative approach for wealth management and investments. Robert also works in private finance with investors and companies delivering financial and management services.