The GBPSGD has formed a traditional technical pattern on the intraday charts, offering up not just a technical bias, but also some key levels to keep an eye on. Here’s what you need to know.
Having experienced some considerable volatility throughout the beginning of the week, the GBPSGD consolidated into Wednesday’s UK trade balance data. The data beat expectations, reported at a deficit of 9.09B versus a consensus forecast of 9.20B, and sparked an intraday reversal from weekly lows at 2.0855. The reversal broke the pair through the 200 period SMA and to fresh weekly highs at 2.0978.
The aforementioned level offered some strong resistance however, and drove the GBPSGD back down towards daily lows during the Thursday European morning session. Price found resistance at what proved to be the first point in the symmetrical triangle, at 2.0917. The pair ranged within the triangle for the majority of Thursday’s trading, but mid European afternoon has broken the lower trendline, offering up a bearish bias as the day matures.
Stochastics are heading towards oversold, so expect a short-term correction before the downtrend takes hold. Look for a failed retest of the triangle’s lower trendline to validate a bearish bias. The traditional target offered up by the pattern would be somewhere in the region of aforementioned weekly lows at 2.0855, but the lack of any real market movers in either currency before the weekend suggests a multi target approach might be a smart move.
The only data that has the potential to affect the pair is the UK CB leading index, scheduled for Friday European morning, but it is not a particularly high impact event. With this in mind, look for an initial downside target of previous support at 2.0903, and beyond that, 2.0894. A strong close below the latter would validate the traditional target mentioned above.
To contact the reporter of this story; Samuel Rae at Samuel@forexminute.com