Speculators who have been indulging in the long-term bearish trend of the USD/SGD may be hearing warning bells ringing. The past three days of trading have seen a strong and diligent rise upward as resistance levels have been pummeled. The USD/SGD opened trading again today with additional momentum upwards and tested levels near the 1.33200 mark before buying pressure subsided.
After taking advantage of a bearish trajectory which seemed to deliver constant results, traders looking at technical charts this morning who enjoy short-term positions may need time to evaluate what looks to be emerging dynamics. Speculators need to be ready for reactionary movements which could prove volatile in the short term as financial institutions seek equilibrium. Risk takers may delight in the potential opportunities, but it will be helpful to have risk management prepared. The USD/SGD may have the appearance of being overbought, but it may prove dangerous to step in front of the fast trend.
The drive upwards can be explained in many ways, but from a technical viewpoint, it may be best to simply look at the past few days of trading as a natural reaction to the pre-holiday bearish movement, which was also rather violent downwards. At the tail end of November, the USD/SGD was trading near the 1.34400 level, and this was after bearish momentum had produced lower values previously. So, while the past three days of trading have certainly seen a reversal higher, the price action of the Forex pair needs to be looked at with some mid-term perspective.
The one-way trend of the USD/SGD is an illusion. Every trader needs to understand that Forex suffers from momentary surges, which can seemingly go against the tide. The short-term rise in value of the USD/SGD must be looked at as a natural occurrence and should be welcomed by traders. The sudden burst upwards opens the door for speculators who still believe that the USD/SGD has the capability of producing more bearish momentum.
The question for technical bearish traders is how to step in front of the recent move higher while trying to sell the USD/SGD. Using nearby stop losses is a good strategy and needs to be practiced when the markets are volatile. Selling the USD/SGD near resistance levels between the 1.32950 to 1.33000 junctures could prove interesting. However, cautious traders may want higher resistance levels to be tested first and they cannot be blamed for this conservative short-term approach.
Singapore Dollar Short-Term Outlook:
- Current Resistance: 1.33160
- Current Support: 1.32900
- High Target: 1.33330
- Low Target: 1.32600
