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    USDSGD ponders next move

    USDSGD has found support around the lower Bollinger Band on W1 but, weighing up all of the signals suggests that any move higher is one to consider fading into. 

    I previous analayis I had provided a call for USDGSD to go up to 1.50. Well needless to say, this is no longer the case but the hypothesis of using a potential CNH devalutation as a signal to trade USDSGD still stands. 


    As highlighted in the Monetary Authority of Singapore's (MAS) statement, they will continue to gradually increase the strength of their effective exchange rate against a basket of currencies. Whilst the rate of increase will be reduced slightly, it should still help send USDSGD lower if we continue to receive any dovish commentary from Yellen and lower forecasts from FOMC staff over the coming months. 





    Technically USDSGD has reached a level where some indications point towards an oversold conditions, whereas price action suggests we may see further losses.

    The detrended price oscillator (DPO) has breached the previous swing lows to suggests this could be part of a bearish break. The red support line has acted as support on a couple of weekly closes whilst it meanders around the lower Bollinger Band, which could be taken as a sign it is over-extended and ready to revert to the mean (20 week average). However we should also consider the fact that it has created an extremely bearish move since breaking below the 20 week MA. Also note that last time the DPO broke to a new high in August 2014 It acted as a breakout signal and the bullish trend resumed. So if this pattern is to repeat now we have broken to a new low on the DPO, we could expect a bear trend to persist. 

    Price action is printing lower lows and high, with notable bearish momentum (when compared to the bullish momentum of the final high). 

    The USD continues to trade in a corrective pattern and bulls remain sidelined, whilst the declines USDSGD on may well be of a more impulsive nature than a corrective one. 

    These forces combined could see another leg down from current levels, making the lower Bollinger Band test a breakout signal as opposed to one of being oversold. 

    A break below 1.347 could target 1.3286 and 1.314 lows. If we do see a bounce higher from current levels and an attempt to revert to the mean then 1.33 and 1.389 re levels to monitor for signs of weakness and seek bearish setups. 


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