Having reached support, we’re looking for a potential swing trade short should a lower high form. Last week we highlighted the potential for the Yuan appreciate and suggested a bearish theme for USD/SGD as it correlates very well with USD/CNY. Since the original analysis, the Yuan has strengthened, which has seen USD/CNY fall over 1% and USD/SGD track it lower. Given that trade tensions have continued to thaw, talks are back on and both US and China are seemingly exchanging good will gestures ahead of China’s 70th birthday celebrations, it’s likely Beijing (sorry.. the ‘markets’) will continue to allow the Yuan to appreciate. Which keeps the bearish UD/SGD theme on the table.

We can see on the daily chart that USD/SGD’s decline has found support just above the 1.3114/24 support zone. As of yesterday’s close, bears have enjoyed 8 consecutive down days, making it the longest daily bearish streak since January 2018. Therefor it’s possible we could see prices consolidate or retrace before its next leg lower. However, RSI is not oversold and there are no signs of a bullish divergence on this timeframe, so we suspect there is plenty of downside potential should it break below 1.3700.

 

 

Interestingly, the decline from September’s high displays a similar velocity to the initial leg lower from the May high. If history were to repeat and maintain a similar structure to the 3-wave move in June, we could see prices rebound to 1.3825 before falling down towards 1.3620. Of course, as the saying goes “history doesn’t repeat but it does rhyme”, it’s unlikely we’ll get an identical move. But we can monitor to see if prices form a lower high before considering a swing trade short or wait for prices to break below support before assuming a run for the 1.3620 area.

 

 

Related analysis:

A Stronger Yuan Could See USD/SGD Drop

CFD and forex trading are leveraged products and can result in losses that exceed your deposits. They may not be suitable for everyone. Ensure you fully understand the risks. From time to time, City Index Limited’s (“we”, “our”) website may contain links to other sites and/or resources provided by third parties. These links and/or resources are provided for your information only and we have no control over the contents of those materials, and in no way endorse their content. Any analysis, opinion, commentary or research-based material on our website is for information and educational purposes only and is not, in any circumstances, intended to be an offer, recommendation or solicitation to buy or sell. You should always seek independent advice as to your suitability to speculate in any related markets and your ability to assume the associated risks, if you are at all unsure. No representation or warranty is made, express or implied, that the materials on our website are complete or accurate. We are not under any obligation to update any such material. As such, we (and/or our associated companies) will not be responsible or liable for any loss or damage incurred by you or any third party arising out of, or in connection with, any use of the information on our website (other than with regards to any duty or liability that we are unable to limit or exclude by law or under the applicable regulatory system) and any such liability is hereby expressly disclaimed

Analysis feed

Latest Forex Analysis

Editors’ Picks

AUD/USD extends recovery gains to 0.6850 despite China’s coronavirus harming risk-tone

AUD/USD stays on the front-foot while taking rounds to 0.6845 amid the initial Asian session on Friday. The pair recently reacted to the preliminary readings of the Commonwealth Bank (CBA) PMI details for January.

AUD/USD News

USD/JPY falls to fresh lows, correcting on WHO statement

USD/JPY has tumbled to print fresh lows since failing on the 110 handle, scoring 109.26 and meeting the 200-moving average on the four-hour chart.

USD/JPY News

Crypto Today: Bitcoin bears force critical

BTC/USD is currently trading at $8,400 (-3.40%) in the afternoon in U.S. hours, as markets bears break critical $8500 price mark, allowing for a wave of further downside pressure. 

Read more

XAU/USD bulls challenging 1573 resistance level

XAU/USD is trading in a bull trend above its main daily simple moving averages (SMAs). After rejecting the 1600 figure earlier in January, the metal has been consolidating near the $1560 per troy ounce.

Gold News

GBP/USD pressured toward 1.31 amid risk-off mood

GBP/USD is trading around 1.31, off the highs. Coronavirus headlines are sending traders to the safety of the US dollar. Speculation about the next BOE move is rife.

GBP/USD News

Forex Majors

Cryptocurrencies

Signatures