CAD/SGD holding well above 1.244 since the start of the week, with numerous attempts to break lower failing. However, rallies has also been capped, with each subsequent swing high since last Friday lower than each other. Stochastic reading is also interesting with both peaks and troughs narrowing, suggesting a lower volatility which is almost always the precursor for a strong breakout. A bearish break below 1.244 opens up previous swing low around 1.24 as a possible support, while a bullish reversal may find some resistance around 1.246 and subsequently 1.248 and ultimately 1.254 (not seen in 1 hourly)
Weekly chart shows a different perspective; price only appears to be barely holding onto 1.244, with a break above opening up 1.28/ 61.8% Fib retracement as a final bullish target. Prices last week formed a Doji which hints at indecision of bulls to be able to push further. Though past 2 days have been good for the bulls, a failure to keep prices floating above 1.24 will open back up first the 23.6% retracement line as support, and ultimately 1.21 – 1.22 which was the previous swing low of Sep ’11 and Nov ’12 respectively.
Fundamentally, SGD remains strong similar to all the other Emerging Market currencies. As for CAD, BOC’s recent Business Outlook Survey suggest that “forward looking indicators” are pointing higher, but the Senior Loan Officer has indicated that Q4 2012 bank lending has not changed significantly despite “several consecutive quarters of easing in credit conditions”. What will BOC in light of all these? Well before we move further, it is pertinent to note that the position of Governor will change in June (or earlier) with the depart of Mark Carney to Bank of England. Without a new successor named, uncertainty may prevent BOC from doing anything drastic in Q1 2013. MAS on the other hand is only scheduled to meet again in April, making Central Bank influence less important for the holding/breaking of current levels in Q1.
More Technical Analysis:
JPY Crosses Technicals – Slight panic post Amari comments but no changes in big picture
GBP / AUD Technicals – Bearish Bias Remain Despite Slight Recovery
SGP / JPY Technicals – Extreme Stochastic Readings Hints of Pullbacks
GBP / USD – Trading back below the significant level of 1.6150
EUR / USD – Runs into a brick wall at 1.3400
This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.