The Singapore dollar is unlikely to add to this year’s 5% slide against Malaysia’s ringgit, underpinned by a moving average that hasn’t been breached for more than 20 years, according to Forecast.

The 100-month moving average on the exchange rate has been a “very reliable support” since 1989, according to Winston Tang, a technical analyst at Forecast. The Singapore dollar has during the period weakened toward the average in 2005, 2007 and this year, though never broke through the level.

 

“It’s a very reliable support and it will work again this time,” Tang said in Singapore, adding that the city-state’s currency will likely “bounce higher from here.”

 

Singapore’s dollar was little changed on the day at 2.3168 ringgit as of 3:23 p.m. local time and the 100-month moving average was 2.2937, according to data compiled by Bloomberg. The currency is poised for its worst annual performance since 2001.

 

“A critical level to watch is 2.2817” as this is where the moving average was in April when the exchange rate last tested the support level, Tang said. “If it breaks through to the downside, then the 100-month moving average will become a very strong resistance,” he added.

 

The Singapore dollar yesterday reached $1.3426 versus the greenback, its strongest level in Bloomberg data going back as far as 1981. The ringgit the same day touched a 13-year high of 3.1098 per U.S. dollar.

 

In technical analysis, investors and analysts study charts of trading patterns and prices to forecast changes in a security, commodity, currency or index. Support and resistance levels refer to points at which buy or sell orders may be clustered.