Quek Ser Leang at UOB Group’s Global Economics & Markets Research reviews the prospects for USD/THB.
Key Quotes
“After trading within the weekly Ichimoku cloud for more than a month, USD/THB cracked the top of the cloud resistance as it rocketed to a high of 32.10 last week (USD/THB closed clearly above the cloud for the first time since September last year). On a 2-week basis, USD/THB gained a whopping 2.28%. Such an outsized rally is not common and in the past 5 years, there were only 3 instances where USD/THB gained more than 2% within two weeks. The outsized rally is currently holding just below the major long-term declining trend-line resistance connecting the highs of Dec 2016 and Apr 2020.”
“In view of the impulsive surge, a break of the major trend-line appears likely. As can be seen in the chart above, previous instances of break of trend-line in USD/THB has resulted in a rapid continuation of the trend. In other words, if there is a clear break of the Dec 2016/Apr2020 trend-line near 32.10, it could lead to further rapid and sharp advance in USD/THB. From a longer-term perspective, resistance is at 32.50, above this level, the next resistance level of note is not until the 2020 high of 33.18. The base of the cloud at 31.50 is acting as rather solid support now but only a break of 31.30 would indicate that the risk for a higher USD/THB within these several months has dissipated.”