The US dollar initially tried to rally a bit on Wednesday but gave back gains near the recent highs at 1.36602 to slip back into the previous consolidation region. The US dollar falling does suggest that perhaps we are going to continue to see a lot of resistance above, as the Singapore dollar tends to be very choppy. Nonetheless, it is worth noting that the area above extends all the way to the 1.3750 level as far as resistance is concerned, so a pullback from here is not a huge surprise.
The size of the candlestick does suggest that we are going to continue to see selling pressure, and if we break down below the bottom of the daily candlestick, it is possible that the 1.3550 level underneath will get broken. At that point, the market then goes looking towards the 50-day EMA. For what it is worth, we have recently seen the 50-day EMA break above the 200-day EMA, forming the so-called “golden cross.” At this point, it should be obvious that the market is trying to break out to the upside, but so much noise just above continues to make it very difficult.
The Singapore dollar is thought of sometimes as a safety currency, but so is the US dollar. The US dollar has fallen a bit against most currencies during the trading session on Wednesday, so the fact that we saw that happen over here is not a huge surprise. However, the US dollar has been strengthening against everything for a while, so if we turn around and break above the top of the candlestick for the trading session on Wednesday, it does make sense that we will go looking towards the highs again.
Keep in mind that you will have to be very patient when trading this market because it does not move as quickly as many of the other currency pairs. Ultimately, the markets have just formed a massive “W pattern” that we have broken out above for the last couple of weeks. The market will continue to be very cautious in general, so at this point in time, I think it probably makes a bit of sense that we would see volatility pick up, not drop. In general, the best way to trade this market is to simply look at the US Dollar Index for clues.
