The Head and Shoulders Pattern on the Hourly Chart is formed, with price trading below the neckline (not shown on chart) and pushing to as low as 1.276 before US trading session. USD/SGD rallied strongly during US hours as USD strengthened together with the rally seen from Stocks. This resulted in a pullback towards 1.28 – one that was ultimately rebuffed, with price trading sharply lower post US midday. Prices were generally stable during Asian hours – when Nikkei 225 and Hang Seng Index were trading higher – pulling US futures up and keeping USD stronger. European hours is a totally different beast, with European stocks trading lower, pulling risk appetite down as well. Understandably, US stock futures collapsed while USD is similarly taking a beating, while USD/SGD is seen trading 40 pips lower than the Asian levels.
What can learn from here is this: USD/SGD bears are actually strong enough to rebuff the strengthening of USD, suggesting that the formation of the Head and Shoulders Pattern mentioned earlier is having a strong bearish impact on prices. Currently we are trading below yesterday’s swing low, with the upcoming support the confluence between rising trendline and Fib extension, which happens to be the ceiling on 4th July and floor on 5th Jul. In order to break it, bears will indeed need to garner every possible strength that they have. It will certainly be preferable if fundamentals can stack together with this bearish sentiment, and with FOMC meeting minutes coming at 2:00pm EDT today. Nonetheless, it is unlikely that the FOMC meeting minutes will be dovish considering that Bernanke mentioned the possibility of QE tapering timeline during last month. As such, likelihood favors a more hawkish minutes, which would translate to stronger USD post minutes reveal.
Stochastic readings is actually in favor of a higher USD/SGD, with readings starting to push higher with a Stoch/Signal cross. However, even if price does rally post FOMC minutes and hit the top of wedge, given current bearishness it is entirely possible that bears may be able to push lower once again especially since the H&S pattern is still in play. Bullish bias will only be reinstated should 1.28 gets broken, and then 1.286 will be opened as a viable target.