USD/SGD Special Positional Analysis: Perfect Channel

3 min read
Davin Wu

Davin Wu

Market Analyst and Educator

Dear Traders,

The price of USD/SGD has been encompassed in a Perfect Channel on the Daily Chart, with price bearishly rejecting from 1.6180 area and bullishly bouncing from 1.3443 from the start of 2019.

The Monetary Authority of Singapore uses yearly “bands” to decide when to buy or sell treasury bonds in an effort to regulate SGD movements in relation to the USD. Due to Singapore’s status as a global major financial hub, as a small country, it is nevertheless trade-dependent and therefore, the correlation and difference in exchange rate of the domestic currency to the reserve dollar has to be strictly regulated to facilitate global trade. Though these levels remain a secret, we can roughly identify them from S&R levels, which is, religiously respected historically. This is why you see such a perfect channel.

As a Singaporean and knowing the domestic monetary policy, I’ve always been excited to trade this positionally. R:R is good, and we have a positive swap so it rewards us for holding it. I have been waiting since February for price touch the lower band area. Now it’s on lower band, and price action shows a decisive bounce.

Technically, on H4, price has bounced from 1/6 MM and W L5 area. If bullish momentum continues, we expect price to hit 1.355 [W H3 // 4/8] and subsequently 1.3610 [W H5 // 6/8 // M H4]

In order for the analysis to remain valid, price must not close below 1.3420

The analysis has been done with the CAMMACD.MTF template.
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Cheers and trade safe,
Davin Wu
Elite CurrenSea

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