Sunday, February 8, 2015

Live Call - Long USDSGD (6 Feb 2015)

I spent some time looking over the daily charts, and found three viable signals that are tradable: the AUDUSD, EURUSD and USDSGD. Using my current price action checklist, I found that the USDSGD scored the most points. This will be how I'll trade it on Monday:

I'll put a buy limit order just above 1.35000 (which has formed an intra-day S/R level on the H1 chart). Stop loss is just below the engulfing candle. I am aiming to take profit just below 1.37000. This would give me a reward of around 1.5R.

Technical Analysis
On the USDSGD chart, we see an engulfing candle bouncing off support and intersecting and closing above 1.35000 (a BRN or 'big round number'). Other technical strengths include:

- it's with the trend
- it's of significant size (1.5*ATR(5))
- the engulfing candle is twice the size of the preceding candle
- strong close (small wick on top)

Fundamental Analysis
Fundamentally, the Monetary Authority of Singapore is dovish, following an announcement to ease the appreciation of the SGD on 28 Jan. The Federal Reserve is marginally hawkish. The engulfing bar itself formed on the back of strong NFP figures from the US. Thus, the fundamentals to buy USDSGD line up. 

The MAS may try to prevent the USDSGD from rising too fast. Price will have to break resistance above 1.35600.

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