The GBP to SGD exchange rate is in the midst of a sideways range-bound move which looks ripe for a breakout.
The GBP/SGD has been going sideways for 9 consecutive days, trading within a narrow band between 1.9790 and 1.9550.
However, of late it has nudged above the 100 day moving average; a significant move as it suggests buyers of sterling-Singapore dollar have cleared out a good portion of the selling interest layered around this resistance point.
That said, there has been no breakout through the other end of the 100 day moving average confirming there is still more work to be done as supply of GBP here is strong and steady.
Looking at GBP/SGD from another angle, there is a possibility it has formed a triangular pattern, which will probably resolve itself by breaking out either higher or lower.
Given the trend before the formation was up – albeit in the short-term – we see a slightly higher probability of an upside breakout eventually as opposed to a downside break.
The exchange has also risen above its 50-day moving average, which is a bullish sign. It has also broken above a down-sloping trend-line describing the previous longer-term down-trend, and whilst there may be alternative places to draw the trend-line where we have drawn it is the most indicative of the trend in our view.
The MACD momentum indicator, though slowing has moved above the zero line distinguishing an up-trending from a down-trending asset.
The 1.9790 level and thereabouts appears to be a key resistance level, which if decisively breached would go some way to establishing confidence in a new bull-trend higher.
A clear break above the triangle highs is required first, however, and this could be signalled buy a move above the 1.9800 level.
The subsequent up-move would probably take the pair all the way up to the 1.9970 level where the R1 monthly pivot is situated and likely to present an obstacle to any further gains.
Singapore based OUB Bank are bullish the pair if it breaks above the 1.9725 level (which has already happened):
“Only a move back above 1.9725/30 would indicate the downward pressure has eased.” They comment in a recenbt note.
Their 1-3 week outlook sees bullish momentum waning:
“While upward momentum continues to wane, only a break below 1.9550 would indicate that the bullish phase that started early last week has ended. This appears to be a likely scenario unless GBP can reclaim 1.9725/30 within these couple of days.”