The USD/SGD is currently involved in a 3300 + pip downtrend dating back to the pairs 1.5570 high created in February of 2009. Currently price is trading in a consolidating triangle off its all time low, at 1.2210, established in April of this year. As price bounces between support and resistance, we can take advantage of this slow down and begin to look for entry orders with the trend.
Fundamentally the Singapore Dollar has been the beneficiary of current growth across the board in Asia economies. This includes China, currently the world’s second largest economy behind the US. As China continues to grow, Singapore will benefit directly from the increased demand for their exports both goods and materials. As regional growth in the Tiger economies continues to expand, it is expected for the currency trends to continue as well.
Price Action
Taking price in to a H4 chart, we can see price trading in between support and resistance in a triangle pattern. A break below support would signal further losses and allow us to continue to trade the continuing trend on the USD.SGD. A breakout below support (1.22850) would signal that price is prepared to head lower and test our current all time lows.
Trading Opportunity
My preference is to enter the USD/SGD on a break under support using an entry order near the 1.2250 level. A stop should be placed above old support over 1.2300. Limits should be set at a minimum of 1.2150 for a 100 pip profit.
Alternative scenarios include price continuing to trade in a triangle. Entries may also be placed against current resistance near 1.2425.
Walker England contributes to the Instructor Trading Tips articles. To receive more timely notifications on his reports, email instructor@dailyfx.com to be added to the distribution list.
