The past day of trading for the USD/SGD has not only reconfirmed the bearish trend of the Forex pair, but the momentum has now punctured long-term support ratios. The USD/SGD is now in territory it has not challenged since June 2018. The ability of the Singapore dollar to sustain its price below the 1.34000 should be watched carefully by speculators.
After strong moves like the one that developed in the USD/SGD the past day, traders are naturally tempted to look for reactions in the marketplace. However, the search for reversals higher can turn into a dangerous endeavor, and the old motto ‘the trend is your friend’ should be practiced as mantra. While it may be fun to brag at a dinner party that you were the first one to predict a reversal in price and that you captured a movement, it should be remembered that in order to be able to brag about such a thing it typically takes about five attempts to attain this goal. Meaning, a trader can be wrong 4 out of 5 times when trying to speculate that price momentum will suddenly change.
Yes, the 1.34000 level was only broken yesterday, which is certainly not a long period, and trading below this juncture has not been firmly established. However, if the USD/SGD is able to maintain values below the 1.34000 mark, traders who are seeking more bearish opportunities will need to look at long-term charts in order to gauge their aspirations technically. Choosing support levels now becomes a bit like ‘black magic’ and the price levels must be considered carefully regarding where targets are created by speculators.
Remaining bearish within the USD/SGD remains the logical decision even after the substantial movement of yesterday’s downward run. Traders do need to remember it is a holiday in the US and trading volumes today and tomorrow will be rather light, which may create some volatility even in the often comfortable USD/SGD if positions become unbalanced because of a lack of orders.
Traders may want to wait for a brief spell and see if the USD/SGD can keep its short-term price range before acting. However, speculators who want to participate in the Singapore dollar may be targeting lower values, while using resistance levels as stop loss ratios. After a quick burst downwards yesterday in the USD/SGD, some traders may be tempted to also look for reversals higher, but they should be careful near term, particularly if risk appetite remains abundant in the global markets.
Singapore Dollar Short-Term Outlook:
- Current Resistance: 1.34060
- Current Support: 1.33620
- High Target: 1.34200
- Low Target: 1.33380
