USD/SGD is yet another beneficiary of last Friday’s strengthening of USD, courtesy of a stronger than expected US NFP print which fuel more rumors of Fed tapering QE in 2013. Price managed to reverse before 1.24 is reached, and more importantly traded back up above the 61.8% Fib and confluence with the 1.245 significant support/resistance which was of high relevance back from Feb – April. Price subsequently continued to push higher during early Asian hours this week, pushing above Mar highs and above the 1.255 38.2% Fib line, with 1.26 interim support turned resistance the next important level standing in the way of the bulls.
From a technical perspective, the ability to push above March’s High and the formation of 3 White Soldiers are important to indicate a reversal from the decline from May’s peak. Stochastic agrees with a reversal scenario, with readings pointing higher with divergence between Stoch/Signal suggesting faster bullish acceleration from here. Should 1.26 be broken, May highs will be a viable bullish objective and 2013 bull trend will extend again should the post 1.27 high is broken.
However, before we count our chickens, it is important to see what short-term charts tell us. Price is certainly bullish in the short-term clearing 2 previous consolidation zones (4th – 5th June and 6th June), but an interim resistance around 1.258 in the form of 3rd June’s consolidation stands in the way even before 1.26 can be tested. Stochastic readings are certainly heavily overbought, with readings reaching unprecedented highs (at least in recent history), which suggest that bearish pressure may take over soon. However, there could be a case for price to maintain elevated for a short-while more, with Stoch line crossing the Signal line from below, suggesting that the current bullish Overbought momentum is not over yet. This would mean that price could still test 1.26, but any higher will require more impetus (either fundamental or from spillover of further USD strength, possibly from USD/JPY rally) to break the level.
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