The Singapore dollar has shown great strength for the past 12 months against the pound sterling, underpinned by the Singaporean economy growing 7.6% and expectations for it to continue growing the rest of this year. Adding to the strength of the Singapore dollar in recent weeks is China starting to lift its strict lockdowns, as China is Singapore’s third-largest trading partner.
Looking at the weekly chart of the GBP/SGD, we can easily see the strength of Singapore weighing this pair down. The GBP/SGD has recently taken out the low from June 2020 and is possibly targeting March 2020's low next.
With an Aroon indicator on the GBP/SGD price chart, we can look at the portions highlighted within the two circles and their corresponding trends in the chart above. The Aroon indicator is typically used for spotting trends and the strength of trends by following the movement of an orange ‘up’ line and a blue ‘down’ line.
The rising up and down lines suggest a weak trend for the corresponding chart within the first circle. This indicates that the uptrend quickly petered out and entered a period of consolidation and a quick reversal.
We can see the down line cross below the up within the second circle before reversing its trajectory. This movement in the Aroon indicator corresponds with the attempted bullish push in the GBP/SGD. Once the Aroon lines reversed, The bullish push disappeared, and a strong bearishness entered the GBP/SGD and did so until the start of May.
We can see that the two Aroon lines are separated by quite some distance. It may be worth keeping track of the Aroon lines to determine how close the GBP/SGD wants to move toward that March 2020 low if its downward trend holds.