Thai Bhat Continues To Fall

The USD/THB pair features the world’s “safest” currency in the form of the US dollar, and one of the highest “risk on” currencies in Asia, the Thai baht. This is a good proxy for Asian growth, and can often represent the possible flow of goods from Asia to North America or Europe. The Thai economy is a very dynamic one, but in that dynamic behavior is often a lot of volatility.

The attached chart is a monthly one. The pair broke out recent, as shown by the dashed blue line. This completed a “W” pattern, and the market appears to be lurching forward now as a result. Certainly, the Dollar has been positive overall, and a lot of traders are much more comfortable in the US than places like Thailand at the moment. Because of this, I believe this pattern will continue. In fact, there is the “height” of the “W” pattern that once measured suggests that we are going 3.0 handles higher. This leads us to the 36 handle, which shows us a massively resistive area as well. If we get above that area, this pair can go much, much higher. However, I think breaking above that area will be a bit of a task.

Another point of interest for me is the fact that the Moving Average Convergence Divergence (MACD) has recently broke above the zero line, which shows that the momentum has in fact shifted to the upside. While I don’t normally trade this signal alone, it certainly can add to the case for a positive move.

I see the 36 level as the next serious target. The area might not be hit for a while, and as this is the monthly chart, it is of course a longer-term play. Perhaps a trade that lasts several months, but with the concerns around the world, and the possible tapering by the Federal Reserve, there should be continued interest in the USD overall. USD/THB Monthly Chart" title="USD/THB Monthly Chart" width="452" height="484">