USD/SGD Weekly Analysis for Singapore Traders
Contents
Introduction
Following the release of the FOMC report last week Friday which speculators believe to give interest rate clues, about all the U.S. dollar currency pairs were bullish, of which the USD/SGD is not left out of the bull run. Still, in the spirit of the FOMC bull-run, this week is expected to continue in the same direction considering the following fundamental and technical analysis.
Fundamentals
Trump’s Trade wars on China
To impose a 25% tariff on a hundred items imported from China. China, on the other hand, said it will retaliate with similar tariffs on U.S goods, as the Dow (DJI) drop on fear of trade wars. President Trump in his interview says that the U.S will do 5Billion dollars on high tech equipment coming into the country, and he continues to say that China and others steal from America’s Silicon Valley brain power, which he believes is America’s greatest assets.
Tariffs are what policymakers call “Protectionism”, tariffs being just one part. Others are Subsidies and Quotas. The demand for low priced commodities imported into a nation may negatively affect jobs in that country. In such scenarios, policymakers use protectionist tools as a way of creating a balance. In an interview with Dian the chief economist at Grant Thornton, she compared this to the trade wars of the 80’s which involved Japan. She concluded by saying that trade wars lead to inflation and consequently a recession.
Singapore brokers and speculators may temporarily have a bias against the U.S dollar, owing to the fact that the nation is also an Asian nation similar to China and similar actions may be taken on them. This may lead to a world trade war as exchange rates of SGD to USD is currently trading below the 65-period moving average of the weekly chart and touching it, hence a resistance.
Technical
With the USDSGD appearing to be overbought, getting an entry is usually tricky as deciphering market direction can be a bit daunting. This calls for a need to zoom in very close to the 1-hour chart.
USD/SGD : 1-Hour Chart
Over here on the 1-hour chart shown above, a bearish regular divergence is triggered at the beginning of the week, causing the pair to retrace a bit from its overbought position. This may present profit taking opportunity for those who are already in profit, entering from the butterfly harmonic pattern from our previous post. A bullish hidden divergence pattern is anticipated still to trigger an end to the retracement which will be triggered by a golden cross of the MACD (9, 21, and 5).
Future price closing above 1.3539 resistance level should trigger an opportunity to scalp towards the upside, although, I’ll prefer to trade in the direction of a MACD bullish cross at this point. A close below the 1.3497 support level may cause the price to move towards the 65-period moving average.
USDSGD: Daily Timeframe
The confluence of event is formed at both the buying pressure shown with the blue grid and the failed sell pressure wrapped around the red grid. Both of which establish a strong support within the same zone, causing a bullish cross of the MACD oscillator just above the MA-65.
USDSGD: Weekly Chart
The buying pressure shown on the weekly chart on 07-05-2018, offered a strong support to the pair, at about the same price support zone of the daily chart.
USDSGD Analysis: Projection and Conclusion
This week, we expect the pair to oscillate upwards, but with low momentum, with possibilities of a topping, given the anticipated bearish hidden divergence.
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DISCLAIMER
I've been a professional trader for over 5 years.
Currently I work as forex analyst for different investment companies.
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