SGDNZD rallies, gaining 98 pips (0.9%) within a single day on high volume
Singapore Dollar/New Zealand Dollar (SGDNZD) Technical Analysis Report for Jul 31, 2020 | by Techniquant Editorial Team
SGDNZD ended the month -1.28% lower at 1.0975 after surging 98 pips (0.9%) today on high volume. This is the biggest single-day gain in over a month. The bulls were in full control today, moving the market higher throughout the whole session. Closing within the previous day's range, prices failed to decisively move beyond the prior day's trading range.
Daily Candlestick Chart (SGDNZD as at Jul 31, 2020):
Friday's trading range has been 121 pips (1.11%), that's far above the last trading month's daily average range of 72 pips. Things look different on the weekly timeframe, where the market's trading range of the last week has been slightly below the market's average weekly trading range. The longer-term, monthly volatility is currently slightly lower than usual for SGDNZD.
In a volatile session, prices traded above the previous day's high as well as below the prior day's low, forming a bullish Outside Bar. In spite of a weak opening the pair managed to close above the previous day's open and close, forming a bullish Engulfing Candle. Additionally, one bullish candlestick pattern matches today's price action, the White Candle.
The forex pair managed to close above the 20-day moving average at 1.0928 for the first time since June 30th. The currency found buyers again today around 1.0861 for the third trading day in a row after having found demand at 1.0873 in the prior session and at 1.0875 two days ago. The last time this happened on June 29th, SGDNZD actually lost -0.54% on the following trading day.
Although the market is experiencing a short-term uptrend, this might just be a correction, as both the medium and long-term trends are still bearish.
Among the 14 market conditions that our pattern recognition engine identified today, the statistics for the Support/Resistance based market condition "Low close to previous two Lows" stand out. While it is usually interpreted as bullish, it has actually shown to be bearish for SGD/NZD. Out of 218 times, SGDNZD closed lower 54.13% of the time on the next trading day after the market condition occurred. The optimal exit for swing trading this condition on the short side has been after six trading days, showing a win rate of 53.21% with an average market move of -0.05%.