Good day one and all,
While most instruments on my chart platform have been showing quite abit of activity over the last few weeks, one forex pair I keep track of has not been moving much. This is the USD/SGD currency pair. In my last post, USDSGD fell a 300 pips before retracing 100 pips over several weeks. Then, another drop occured but it was not so serious, and another consolidation appeared. Since then, USDSGD has been in an obvious small parallel channel.
The two pairs of bollinger bands that I use for short-term set-ups – 20 days MA with 2 standard deviation-bands and a 50-day MA with 1.5 standard deviation-bands – have closed in on price. The 20-day BB even looks like it is constricting. What the BBs tell me is that USDSGD is in a narrow, rangebound market. As John Bollinger said in his book on Bollinger Bands, ”high volatility begets low and low volatility begets high.” What this means in our case is that a strong move should be coming soon. While I favour the downside because of factors such as a mid-term downtrend, and the very recent downward pressure on the greenback, I will also be ready if USDSGD rallies. However, the picture looks more bearish than bullish for USDSGD. The indicator that will affect my trading set-ups will be the Bollinger Bands. Let us see how this goes.
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