The US Dollar versus the Singaporean Dollar was consolidating for a few weeks, until today we finally saw a bullish breakout of the 1.3400 round number level. The consolidation that the pair was having is a resting area after a bearish correction of a much larger uptrend that cannot be seen on the current chart, courtesy of the Forex Broker ActivTrades http://www.activtrades.co.uk/. The daily chart of the USD/SGD is showing a green area where the price was oscillating between the 1.3161 as support and the 1.3400 as resistance.
The breakout could have happened in any direction and that is why it is riskier to take a position before the breakout, due to the fact that we cannot be 100% sure as to which direction the price is going to break out of. But once the breakout has been confirmed, then a breakout-and-pullback pattern may develop.
For a breakout-and-pullback pattern to be completed, there should be at least another bullish candle and then two or three bearish candles pointing to the downside and taking the price again to the 1.3400 level. Under the premise that resistance becomes support or support becomes resistance, a pullback to the 1.3400 level, could cause that level to become support.
Alexander Londono – Analyst contributor at ActivTrades.
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