USD/SGD Technicals – False Dawn on 1.24 Partis Três

3rd time lucky? Apparently not. USD/SGD has tried to push above 1.24 (the 61.8% Fib retracement) for the third time since the Turn of Feb but have been rebuffed the same number of times. The latest rejection came even more furious just as price also attempted the furthest north above 1.24, touching 1.245 this time round.

Daily Chart

Stochastic indicator reading suggest that the failed pushes are indication of a top in place. Ever since the 1st failed attempt, Stochastic reading has been firmly below the 80.0 level. The recent touch of 1.245 failed to move Stoch readings higher, however the rejection has a more profound impact on readings with Stoch/Signal line crossing. This divergence between Price and Stoch peaks enhances bearish sentiment, and suggest that we could have seen the last hurrah from the bulls before bears take over.

Be mindful that uptrend from October 2012 lows still remain intact despite the failure of 1.24. Bearish sentiment can only be affirmed should price break below 1.235, and preferably below the 1.234 levels to open up further bearish objectives.

Weekly Chart

Weekly Chart shows the same thing again, with the 3 failed attempts even more apparent and current weekly candle showing a gravestone doji. Price remains on the downtrend from multi-year high of ~1.8, and weekly trend appears to continue the direction with current push to 1.24 looking merely like a recovery. Further strengthening of SGD from here on out appears likely, with Stochastic indicator also pointing lower.

However, one way down for USD/SGD is not a forgone conclusion. Fundamentally, we should expect USD to strengthen somewhat within the next few years. FED’s Plosser mentioned today that the FED may start to reduce MBS and Treasuries purchases within 2013, while unemployment rate in US is expected to fall to 7.0% by year end. This outlook favors a stronger USD in 2013 and may continue higher should monetary easing stop entirely. Singapore on the other hand is not really enjoying the global recovery as much as it should. Similar to Australia, both AAA rated countries have over-achieved while the rest of the world suffer. Now that Europe and US are looking healthier, the comparative advantage/safety of both countries are starting to lose out, and we could see both SGD and AUD give up some of their gains over the next few years as the world’s economy return to normal.

More Links:
GBP/USD Falls to 6-Month Low Below 1.56 Before BOE Data
AUD / USD – Climbs off the Canvas to Back Above 1.03
EUR / USD – Moves Confidently Back Above 1.34

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