Bloomberg News

Dollar May Fall to S$1.2385 on Average Break: Technical Analysis

January 31, 2012

Jan. 31 (Bloomberg) -- The dollar may decline toward the lowest level in three months against its Singapore counterpart after falling below the 200-day moving average, Forecast Pte. said, citing technical patterns.

The greenback may approach a key support level at S$1.2385, said Winston Tang, a technical analyst at Forecast. The currency touched its 200-day moving average versus Singapore’s dollar on Jan. 26, data compiled by Bloomberg show.

“The close below the 200-day average should boost the downside,” Singapore-based Tang said. The dollar may “reach S$1.2385 in less than a week,” he said.

The U.S. currency was little changed from yesterday at $1.2581 as of 6:56 a.m. in Singapore. It last reached S$1.2385 on Oct. 31. The U.S. currency’s 200-day average was at $1.2541.

Its moving average convergence/divergence, or MACD, was at negative 0.0097, below the signal line of minus 0.0072, Bloomberg data show. A reading below the signal line indicates the dollar may weaken.

The 200-day moving average is a technical indicator that displays the average value of a security over that time period. MACD is a gauge of momentum and is calculated by subtracting the 26-day exponential moving average from the 12-day average. The signal line is a nine-day exponential moving average of the MACD, and provides buy and sell signals. Support is where buy orders may be clustered.

In technical analysis, investors and analysts study charts of trading patterns to forecast changes in a security, commodity, currency or index.

--Editors: Naoto Hosoda, Jonathan Annells

To contact the reporter on this story: Kristine Aquino in Singapore at kaquino1@bloomberg.net

To contact the editor responsible for this story: Rocky Swift at rswift5@bloomberg.net


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