Potential signal
- I believe a move above the MYR 4.52 level is a buy signal which I will accept.
- I would have a stop loss at 4.45 and target 4.70 above.
During the trading session on Tuesday, there was a fairly significant breakdown in the USD/MYR pair, which is a bit much when it comes to the forex world at the moment, as the US dollar was extremely strong. However, this sets up an interesting trading opportunity if we actually see a start. I think this pair will continue to be very noisy, and so I think you should be careful with your positioning, but I also recognize that the Malaysian economy is a bit stronger than many other Asian ones.
Technical analysis and breakout
At this point, the “double top” we formed at the 4.52 level is now my trigger to start buying the US dollar against the Malaysian ringgit. If that actually happens, then I think we have a situation where the market could very easily go to the MYR 4.70 level. A pullback from here opens up a lot of buying opportunities all the way down to the MYR4.44 level, where the 50-day EMA currently sits.
I believe this is a market that is still very noisy, but given enough time, I think we have a situation where buyers will come back into the situation and push the US dollar higher. After all, we’ve seen the US dollar take down almost everything it touches, and it’s probably worth noting that we recently saw the Malaysian ringgit as one of those victims. I don’t think that’s changing, but I think it’s more likely to be a scenario where we could go a little bit sideways to digest a lot of the gains. Still, given enough time, I think this is a scenario where traders will be more than willing to jump in and try to take advantage of the “cheap US dollars” whenever they can.
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