USD/MYR Technical Analysis

The US Dollar is down -0.17% against the Ringgit on Tuesday and is now trading at 4.6620. The downward movement comes as a natural reaction of the market after the extensive upward movement that has been in place since the 14th of April. From a technical point of view, yesterday the USDMYR was in an overbought region, marked by the reading of 73.12 on the Relative Strength Index (RSI) indicator. Readings above 70 tend to show exhaustion of buying power. Another element that favours an important bearish retracement on USDMYR is the presence of a Classic Bearish Divergence on the daily chart (CBD), which is characterized by the presence of higher highs on the price, but lower high on the RSI indicator. A final element that points to a more important decline is the presence of a candlestick pattern known as a pin bar yesterday. The Bearish Pin bar usually has a major tail to the upside and the body of the candlestick is smaller than 1/3 of the size of the entire candlestick. As the price managed to break below yesterday’s low today, it is possible that USDMYR will drop to the region of 4.6000 and 4.5250 in a few days.