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Today’s Trading Edge: USD/SGD: Currency wars continue as another surprise central bank decision happens

Posted by Edward Moya on Jan 27, 2015 10:22:00 PM

WWM USDSGD JAN 28 2014

USD/SGD soared to the highest levels since 2010 after Singapore’s central bank stunned markets with an unexpected decision to ease.  The Monetary Authority of Singapore surprised markets making this decision a few months ahead of its next scheduled meeting.  Concerns for declining inflation and the Singapore dollar’s strength against a basket of currencies were the reasons for urgency in acting.  The Singapore currency is on a managed float and the central bank will alters the slope at which it appreciates.    

Price action on the USD/SGD daily chart shows that knee-jerk reaction has both tentatively formed a bearish ABCD pattern and a touch of the upper boundary of the bullish channel that has been in place since last summer.  While further upside appears apparent, traders may see price consolidate here before having the next leg higher. 

The bullish stance is firmly in place with price trading above all three key SMA’s.  When the next rally occurs, key resistance will come from the 1.40 handle.  If that area is easily breached, the bullish move might stall out at the 1.4250 region.  Eventually longer-term upside may eventually target 1.55.      

The trade: Buy USD/SGD at 1.3505 with a stop loss at 1.3405 and a take profit at 1.3995.  The Risk/Reward ratio is almost 1:5

Edward J. Moya

Technical Strategist

WorldWideMarkets Online Trading

Topics: usd/jpy Bank of Japan, $USDJPY, DXY, USD, 10-year US Treasury, 10-year Treasury

 

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