Yesterday we discussed whether the recent bullish breakout of 1.26 was still in play, and concluded that the answer is yes. Price eventually did retest 1.27 once again and even tagged above 1.272 in the process, in line with the assertion of current bullish breakout. However, the overall cautions that were expressed yesterday remains as well, with prices trading back below 1.27 once again during early Asian trade.
From a technical perspective, it seem that 1.27 is a strong resistance to behold in the short-term. With the failure to hold above 1.27, the 1.266 and the rising trendline opens up as potential bearish target. There is still the possibility of 1.268 acting as interim support, and should the level hold, it will not be surprising to see bulls being able to retest 1.27 and potentially higher once again. Stochastic indicator suggest that a bear cycle is underway, which enforces the idea of 1.27 as a strong resistance.
Nothing has changed much from the Daily Chart, with current breakout still in play yet there is no evidence that price is undergoing a bullish extension from here. Today’s candle is looking likely to close below the previous swing high back on 23rd May, and points to further consolidation around 1.265. The dangers of price holding current levels until the rising trendline takes over remains, and that could usher in a new bearish retracement towards 1.255. Stochastic readings are unclear currently – though readings were heading lower and hints of a bear cycle looks possible, the Stoch line has since flattened just above 80.0 and is looking likely to cross the Signal line to form an interim trough within the Overbought region. Also, the recent Stoch peaks since May 15th has been trending lower, while price peaks have headed higher, which suggest that bearish signals from Stoch should be filtered out. Nonetheless, if the bear cycle does take flight, it would be highly complementary to the break of the rising trendline and affirms a potential strong retracement.
Fundamentals remain the same and nothing much has change since yesterday. However it is worth noting that yesterday’s better than expected US Consumer Sentiment data drove USD stronger and thus USD/SGD higher. With Preliminary US GDP data coming up on Thursday 8.30am EDT, it is likely that this news may help us determine short-term direction between bulls and bears especially if price remain consolidating around 1.265. Long term implications remains upbeat in favor of USD due to the strength of US Stocks that is driving USD higher. Hence a weak US GDP figure may not be strong enough to steer current Stock trends but only result in a shorter-mid term pullback.
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