AUD/SGD 1H Chart: Channel Down
AUD/SGD 1H Chart: Channel Down
- The Australian Dollar is trading against the Singapore Dollar in a short-term descending channel, which consists of four reaction highs and three reaction lows and, thus, might be broken already by the end of the week.
- Historically, the currency rate made multiple attempts to break to the top.
- However, each time these endeavours were stopped by a combination of the 55-, 100- and 200-hour SMAs.
- The fact that this pair is so sensitive to the above moving averages suggests that a breakout in the northern direction is unlikely to happen.
- Moreover, channels are continuation patterns and, thus, should not change a recently established general downtrend.
- The above assumption is additionally supported by the fact that 73% of traders hold short positions on this currency pair.
AUD/SGD is currently trading in two channels down simultaneously. Both formations have maintained the rate in a relatively stable position for the last two months.
The Aussie was driven by strong downside momentum on Monday which pushed the rate down to the 1.0725 mark. As a result, technical indicators fell into the strongly bearish and oversold region and was consequently followed by a rebound. The rate accelerated considerably early on Tuesday, thus adding some ground to the assumption that it could push towards the upper boundary of the junior channel this week.
However, the rate is limit by a resistance cluster formed by the 55-, 100– and 200-hour SMAs, the monthly and weekly PPs and the 38.2% Fibo circa 1.0780. In order to breach this area, bulls have to accumulate significant strength. If this scenario fails to occur, the rate could reverse back to the 23.6% Fibo and try to surpass 1.0780 once more.