Trade Recommendation: USD/THB

The US Dollar/Thai Baht pair (USD/THB) launched its bull run in June 2013 when it took out resistance of 31. The price action attracted trend followers and breakout traders which helped push the USD/THB pair to as high as 36.668 in October 2015. In a couple of years, the US Dollar rose by over 18% against the Thai Baht.

At this point, however, the market was in overbought territory. Those who bought the breakout took it as a signal to lock their gains. With sellers dominating the market, USD/THB nosedived to 31.088 in March 2018. The market may look extremely bearish, but it appears that the bottom is in sight.

Technical analysis reveal that the US Dollar/Thai Baht pair may have capitulated in February 2018 when it printed over 262% of its average monthly volume. Volume also surged in March 2018 when the pair hovered above 31 indicating that bulls are buying the support. Furthermore, a bullish divergence was spotted on the RSI. This tells us that the pair is gathering the momentum it needs to end the downtrend.

The strategy is to buy as close to 31 possible. If bulls preserve the support, the USD/THB will likely use it to rise to our target of 36. The process may take a year.

Weekly Chart of USD/THB on OANDA

As of this writing, the USD/THB pair is trading at 31.19 on OANDA.

Summary of Strategy

Buy: As close to 31 as possible.

Target: 36

Stop: 30.4

 

Featured image courtesy of Shutterstock

Kiril is a CFA Charterholder and financial professional with 5+ years of experience in financial writing, analysis and product ownership. He has passed all three CFA exams on first attempt and has a bachelor's degree with a specialty in finance. Kiril’s current focus is on cryptocurrencies and funds, as he does his own crypto research and is a Product Manager at Mitre Media. He also has his personal website, InvestorAcademy.org where he teaches people about the basics of investing. His ultimate goal is to help people with limited knowledge of finance and investments to create investment portfolios easily, and in line with their unique circumstances.