This article is Part 2 of a series.
USD/SGD looks like it’s topped out for now.
Recently, the 20-day SMA had acted as a dynamic support level.
But today, it finally closed
So I decided to cut my losses and exit at 1.4235
This is a loss of 265 pips or 1.8%
This trade wasn’t looking good when it USD/SGD failed to make a new swing high and instead made a lower high after hitting resistance at the 1.4400
I will continue to stalk this currency pair since I still think the Singapore dollar could further weaken.
In order to slow this resurgence, Singapore sent students home, closed most workplaces , and put dormitories housing 20,000 foreign workers on lockdown.
This past Monday, Heng Swee Kea, the Deputy Prime Minister, acknowledged the severe disruption this would have on businesses and workers and announced a thirdS$5.1 billion
Named the “Solidarity Budget
This is in addition to the S$6.4 billion “Unity BudgetResilience Budget
Props for throwing billions out there. But will it be enough?
Maybank Kim Eng economists Chua Hak Bin and Lee Ju Ye downgraded their full-year GDP growth forecast to -6%
With 30% of the economy shut down for a month
From here, if 1.4200 can’t hold as support, I think USD/SGD could fall back down its 50 SMA (blue line) and even retest 1.4000.
Why not go short then?
For me, I’m not a fan of the risk/reward ratio. If I short now, around 1.4240, I’d put my stop above the most recent swing high, say 1.4420.
That’s a loss of 180 pips
I’d be targeting 1.4000, which would be a gain of 240 pips
So I’d risk 180 pips to make 240 pips?
And that’s if I short now. It’s even a worse risk/reward if I have to wait for the 1.4200 support level to break down.
So for now, I sit on the sidelines. (And will take a mud bath in my swamp.)
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Read more about this trade idea's development over time.
Pippo thinks more traders will favor the U.S. dollar over the Singapore dollar during this time of global crisis. With USD/SGD managing to close above a major resistance level, he looks to go long.
Pippo went long USD/SGD but gets stopped out. See where he thinks the Singapore dollar is headed from here.