The USD/SGD is traversing support levels not seen since early March and will make speculators contemplate trends.
In early trading this week, the USD/SGD has been able to stop the short-term bullish trend which was consistently challenging resistance levels and prove that bearish sentiment remains strong enough to create reversals downward. The USD/SGD finds its value near early March support levels and, intriguingly, the junctures being tested have a large amount of room to traverse lower if they prove vulnerable.
The past month of trading within the USD/SGD has been challenging, because traders who have been pursuing the long-term bearish trend of the Forex pair have faced choppy conditions. The value of the USD/SGD has certainly been affected by sentiment being generated in global markets as financial institutions reacted to the massive US stimulus packages being discussed and approved. New stimulus proposals linger, but it is possible the ingredients of the newer spending suggested from the US government have already been anticipated by investment houses.
The notion that the rumors of more stimulus have been acted upon by so-called ‘smart money’ and the global markets will not react violently to the ‘developing news’ leaves the door open to technical traders to consider direction. The prospect that resistance levels have proven adequate and the USD/SGD is about to resume its bearish momentum which it has demonstrated abundantly over the past year that it can be contemplated.
Cautious traders may want to see the current value of the USD/SGD sustain its price range and make sure resistance levels hold. If the USD/SGD can maintain its value comfortably below 1.34000 and incrementally lower resistance near term, speculators may look at three-month charts to use as guides when they look for targets below. If support near the 1.33700 and 1.33600 junctures fails to hold back a wave of bearish sentiment, a genuine test of February values may be seen. The question is if resistance will now hold and if the short-term bullish trend which has experienced is ready to collapse.
However, collapse may be too strong a word, because reversals will always happen within the USD/SGD. The idea of trend is important, though, and if bullish momentum due to conservative sentiment being generated in financial institutions is weakening, speculators may find an opportunity to once again nourish the idea that selling opportunities are emerging again in the USD/SGD.
Singapore Dollar Short-Term Outlook:
Current Resistance: 1.34020
Current Support: 1.33700
High Target: 1.34210
Low Target: 1.33380