Forex Investment and Currency Trading

• USD-SGD looks to be putting in a double bottom below 1.35
• If confirmed, this suggests a test of 1.3660 and 1.3850 in the next few weeks
• Risk would be for a sustained drop below 1.3450
• Technically, we should reduce USD-SGD shorts, eliminate on a break of 1.3660

Technical Indicators: Mixed

14-day RSI: Bullish signal
RSI is at 38.05 is turning higher from the approach to oversold levels and is suggesting that shorts take profit or is giving a small USD ‘BUY’ signal. If the recent low at 32.78 can hold, the ‘BUY’ signal should garner more confirmation. Bullish divergence is clear on the chart.

Stochastics: Bullish signal
The fast stochastic is rising above the slow indicator from oversold, which is giving a take profit signal for short, and an early ‘BUY’ signal. A turn above the 20 level would confirm the turn higher.

MACD: Bearish signal
The daily MACD indicator is still falling, with the fast and slow lines below the zero level, giving a ‘SELL’ signal.

Analysis – Daily Chart
USD-SGD pushed to new cycle lows this week at 1.3450, but the USD again found buyers below 1.3500, forming a potential double-bottom. A move above 1.3560 resistance would reduce downward pressure on USD-SGD and a break above 1.3660 congestive resistance would be key, helping to form a base in the 1.3450-3660 area. That said, a downward extension below 1.3450 would disappoint buyers, leaving 1.32 and 1.30 open. Daily momentum indicators are mixed overall, but are starting to turn higher.

Analysis – Weekly Chart
USD-SGD is vulnerable to further losses, but the weekly momentum oscillators are starting to turn higher. The fact that the push below 1.35 drew out USD buyers again is supportive of a bounce strategy and could see 1.3850 approached over the coming weeks. This marks the potential double-bottom mid-point, which when cleared would leave 1.4200/1.4250 attracting on a simple measure. A drop below 1.3450 would leave 1.3200 and 1.3000 to attract. Although it is not expected this to happen, downside risks remain high given the bear trend – the 13-week Moving Average (MA) at 1.3629 is well below the 50-week MA at 1.4223.

FX Strategy – Three-Month View
USD-SGD appears to be forming a double bottom below 1.35. Technically should reduce shorts and eliminate them on a break of 1.3660.