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What is USDSGD trend? How will it turn out in 2014?

Singapore Dollar one of best long term currency investments

The USDSGD pair is currently trading around 1.27. Few will remember that once upon a time it was doing 1.85. In my story ‘Why should individuals in foreign currencies?‘ I recalled

Based on the 2001 exchange rate of 1.85 nine years ago, it took 54 US cents for a US citizen to buy 1 Singapore Dollar (an investment in a foreign currency to him). Nine years later, this savvy investor would receive 83 US cents (his native currency) when he sold his 1 Singapore Dollar. That is an amazingly sexy long term capital appreciation of 29 cents or 54% gain.

Singapore Dollar

Singapore Dollar made 54% gains against the USD

 

After 3 years of consolidation, will 2014 be a watershed for USDSGD?

I invite members of this community to comment, predict where USDSGD will head. As an incentive, the best three responses before 6pm tomorrow will receive three support class vouchers worth S$120 (1. only Tflow® students qualify 2. cannot be used to redeem cash 3. must use by end June 2014).

As a reminder, some technical analysis concepts involved:

  1. Previous trend (2009 – 2011) is down.
  2. Price action continues to print lower annual highs.
  3. Price consolidated in a triangle chart pattern over the past three years; this is an exchange of hands as early entrants take profit while late entrants position themselves.
  4. USDSGD technical picture the last time we looked.
  5. USDSGD will continue to get squeezed as it moves towards an ‘apex’ where it has to breakout at some time.
USDSGD

USDSGD must find path of least resistance

For non-Singaporeans, an easy way to expose oneself to the currency is through this ETF.

 

Director, TerraSeeds Market Technician Pte Ltd. Trader, investor. @sohtionghum was picked ‘Top 70 Forex Twitter in 2015’. Operates multiple strategies.

“Dear reader, I do not have a financial license to give advice. I do not know you the reader. Your financial objective and risk tolerance may be different from mine. I am not responsible for any consequence of your action.

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21 thoughts on “What is USDSGD trend? How will it turn out in 2014?”

  1. Soh Tiong Hum says:

    Thanks to Michelle Chia for her timely clarification. I wrote:

    As an incentive, the best three responses before 6pm tomorrow will receive three support class vouchers worth S$120 (1. only Tflow® students qualify 2. cannot be used to redeem cash 3. must use by end June 2014).

    Yes. Each person will receive 3 each. So better be good.

    1. Shao Guoyong says:

      Hi Tiong Hum,
      I am currently doing some simple research if investing in foreign fixed deposits will give better returns instead of the safe local fixed deposits. (This was inspired by the post on RMB fixed deposits) And if so, which currency might offer the best returns in the span of 1-2 years time.
       
      1) Bias of USDSGD
      I am currently not decided on the bias of USDSGD, as price has not broken out of the triangle, yet.
      Having said that, my bias for USDSGD remains bullish.
      My moot comes from the case of SGD weakening, rather than the strengthening of USD.
       
      USDSGD big trendline as next resistance :
      http://www.pinterest.com/pin/399553798162617689/
       
      For EURSGD , GBPSGD and NZDSGD, all 3 seems to suggest an upmove in the year of 2013 ,
      Having WR multi year’s low, while NZDSGD has closed above a major resistance and fib6.
      For all three currencies, successive years of higher low seems to suggest an impending upside for their charts; the common denominator being SGD.
      The only exception will be AUDSGD. Although I see an monthly Inverted head and shoulders, it seems to be failing now.
       
      EURSGD strengthening:
      http://www.pinterest.com/pin/399553798162617722/
       
      GBPSGD big bear trap? :
      http://www.pinterest.com/pin/399553798162617683/
       
      NZDSGD successive higher lows and close above big fib6 :
      http://www.pinterest.com/pin/399553798162617686/
       
      AUDSGD- decade ihs seems to have failed though:
      http://www.pinterest.com/pin/399553798162617739/
       
      Therefore, if my moot for SGD to be weakening can be taken, then it may be a matter of time that USDSGD may see upward movement as well.
       
      2) Possibilities of investing in foreign fixed Deposits
      That having said, if SGD is to weaken in the coming years, I will like to ask:
      Are NZD fixed deposits suitable vehicles for both yield and currency appreciation in the coming 1-2 years?
       
      NZD with highest fixed d:
      http://www.pinterest.com/pin/399553798162617826/
      ( dbs rates)
       
      Let me know your comments.
      Thank you,
      Yong

      1. Soh Tiong Hum says:

        Hi Guoyong, I left comments in your pinterest. As for Kiwi Dollar, to generalise besides the importance of macroeconomic considerations, I have observed that the best time to place long term foreign currency FDs is when interest rates are at all time low. That way, the currency is less likely to depreciate because of lowering rates but more likely to appreciate if policy makers raise rates. Your concern then is whether Kiwi rates are likely to fall further.

        1. Shao Guoyong says:

          Thank you TH,

          Will research on the concept of foreign FDs being more attractive when interest rates are at all time low.

          1. Daniel Ku Guet Liang says:

            Guoyong – learned alot from your analysis. 1 Question: where to get those eursgd, gbpsgd, nzdsgd chart? Tks.

  2. Daniel Ku Guet Liang says:

    Here’s my attempt:
    I suspect you gave the keyword: least resistance. I see the pair test support more often that resistance. Supporting this, there is also a suspected HS formation across 2yrs time span & in latter part, there are more signs of bullishness (D1 box). So, my guess is this pair is attempting to heads up.
    http://www.pinterest.com/pin/403987029045752882/

    1. Soh Tiong Hum says:

      Hi Daniel, thanks for the illustration. Really helps. Strictly speaking, an inverted head and shoulders pattern has to be really at the bottom. Yours is outdone by the 2011-low.

  3. Sek Soon Ann says:

    Understanding from chart patterns, the weekly chart patterns display a bearish pennants. Hence my take that it is likely that it will continue to be bearish as a form of trend continuation.
     
    Looking at weekly chart for the year of 2013, the price of USDSGD is resisted TWICE at around the 1.2850 range. which is around the is year low of 2010 ( support turn resistance). Given that price did attempt to break the resistance twice but fail and this resistance is at a higher timeframe, USDSGD remains to be bearish until the resistance 1.2850 is broken.
     
    Still weekly at the weekly chart, within the pennant ranging from June 2012 til today, there is a big downtrend 1234 form with a deep retracement to f8. where the point 4 also sits at the significant resistance of 1.2850.
     
    All in all, USDSGD remains to be bearish in the coming year.

    1. Soh Tiong Hum says:

      Excellent explanation. Everything depends of course on the strength of support and resistance levels that are now acting as boundary but that pennant is most telling.

  4. Andy Ng says:

    Pls allow me to try and start the ball rolling even though I am still a newbie.
     
    Weekly chart:
    1) Price are going sideways resisted by 1.286 region and supported by 1.234 region.
     
    Day chart:
    1) Put in the boxes and we see bullish expansion. Most likely, price is going to test the upper limit.
    2) From the H4 boxes, we also see price forming HH and HL.
     
    H4 chart:
    1) With the boxes, we see clearly that price is currently supported by previous H4 boxes.

    Conclusion: Currently price might be heading towards upper limit. If range not broken, we will see further 1.286 – 1.234 movement. Nevertheless, 1234 can also be found within the wide range. However if the upper limit are broken, we might see further upside.

    1. Soh Tiong Hum says:

      Excellent Andy. Very organised and systematic approach to your analysis.

  5. Tavion Chee Yue Tan says:

    Current Bias is still an upflow Though boxes, Fibs and S&R of higher high & lower lows.
    price is likely to find support 1.2700 – 1.2500 area. with resistance (TP) on 1.2760 & 1.2780.
     
    As long as price stays above the 1.2500 bias will still be bullish. However to look for a further long term bullish bias ideally would like to have price close above 1.2850.
     
    That being said if 1.2500 is broken & closed on the day charts bias would have to be changed to a possible Bearish outlook

  6. Yeo Yue Hui says:

    Allow me to pen down my 2 cents worth:
     
    The longer trend on the monthly chart is still down, with price oscillating in a triangular consolidation. Longer term bias bearish.
     
    In the short term, price is likely to climb up to test resistance given by the downward slopping trend line (the orange line drawn by Tiong hum that connects the previous highs).
     
    Since longer term outlook is bearish, price is expected to have trouble breaking resistance.
     
    Only when price manages to break and close above the said trend line and the highs of Aug 2013 (1.285) on a weekly candle, should traders suspend their bearish expectations.
     
    To resume the longer term downward trend, price will need to break the lower trend line that defines the lower boundaries of the triangle. But this will likely take weeks if not months. Until then, price is expected to oscillate in the triangle in the medium term.
     
    In summary, IMHO, short term up, medium term consolidation within triangle, long term bearish.
     
    Cheers!
    Yuhui.

    1. Soh Tiong Hum says:

      Great. Are you clairvoyant? You just spoke my mind. I also like the way that you have organised and segmented your opinion based on the different time frames and the conditions required to fulfil or reject the picture.

  7. Victoria Yam says:

    Aiyah, as usual, even if I get it correct i’m a late bird so no worms. Nevertheless, still try.
     
    Monthly chart – trend down
    Weekly – some congestion but there’s still LL. Until this trend is broken, it is still bearish.
    Daily – Bullish expansion but until the upper limit of the pennant is broken, the bias is still bearish.
     
    Pennant- If I’m not wrong, a pennant with a downwards flagpole usually means the bias is a break down. So my bet is a continuation down.

    1. Soh Tiong Hum says:

      Hi Victoria, timing is not an issue as Jerome tweeted although it may be used as a tie-breaker.
       
      However I can give you a few tips: 1) Be precise about what you think and provide illustration is necessary (take clues from Daniel and Guoyong) 2) I don’t appreciate wordy but write enough to justify so I know whether you understood your stuff or not. If your explanation is too short, it is hard to determine whether you got lucky.
       
      Coming to your input, what you have said is imho the same as Yuhui’s explanation above but her explanation is clear and easier to understand for both old timers and new ones. Do not be discouraged. Please continue to contribute.

  8. Jerome Lee says:

    On behalf of Gayathri who send in her answer via email.

    http://www.pinterest.com/pin/441986150901864865/

    1. Soh Tiong Hum says:

      I have written to Gayathri. Here is my response.
       

      Hi Gayathri,
       
      Thanks for sending in your response. Before I address them, I’d like invite you to put your response into the comments inside the blog directly in future. If you do so, A) you can help us to contribute to the atmosphere of discussion and learning B) to share what you see with other students. That way everybody learns from both correct and wrong responses.
       
      I have gone through your charts and the narrative you provided for each. In general your understanding and application is sound and I like the way that you have taken step by step to arrive at your answer. I would like to point out however that for the weekly chart, there is one mistake: that double bottom which you pointed out is NOT a double bottom. Strictly speaking a double must be absolutely at the bottom. In this chart, the dominating feature is a symmetrical triangle instead.
       
      USDSGD is indeed heading up at the moment. It must now test resistance however and if it fails, a reversal may happen. The resistance is a significant one since it is part of a visible symmetrical triangle that many traders will be looking at. The more visible the stronger it is. I emphasised concepts involved over here https://www.terraseeds.com/blog/2013/05/significant-support-resistance-levels-are-stronger-usdjpy-case-study/

  9. Michelle Chia says:

    Overall is still down as this blog already pointed out previous trend (2009 – 2011) is down. However, year 2012 and 2013 shows about the same box low. And the whole of year 2013 was trading above year open price. Dec 2013 bullish expansion closed above double top neckline and now the candle is trading above year 2014 open price. With all these bullish signs, price likely to go up.
     
    But notice that there is a resistant zone above formed by year 2010 box low and year 2013 box high and also year 2013 double top. This resistant zone happens to be fib3 of the down flow of year 2009-2011. Another resistant will be the upper trendline of the triangle?/pennant? So bull may stopped by these resistant. Noted on point number (2)Price action continues to print lower annual highs, likely this resistant zone may hold.
     
    If price do break above this resistant zone, bull is very strong. Thus price may travel up to form point 4 to complete a Tflow 1234.

  10. Soh Tiong Hum says:

    Dear participants, after looking at your responses, Sek Soon Ann, Yeo Yue Hui and Andy Ng will each receive 3 x S$40/- for support classes. Please note terms and conditions of use 1. only Tflow® students qualify 2. cannot be used to redeem cash 3. must use by end June 2014. Cynthia will contact you shortly to arrange for collection.

  11. Soh Tiong Hum says:

    Andy Ng is contributing 2 of his 3 vouchers to runner-ups in this quiz. I announce that Victoria Yam and Michelle Chia will each receive 1 piece of voucher for support class. We thank Andy Ng for his generosity.

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