After producing a slight and comfortable bearish trend for the past week, the USD/ZAR finally broke through support near 17.25000 yesterday and challenged the 17.11000 mark briefly. The move was expected because resistance up above had produced a rather solid ceiling while global risk sentiment remained steady. However, the stronger selling then produced a reversal higher for the USD/ZAR yesterday as the day progressed.
Interestingly, the countermove higher since hitting the low watermarks, has also produced higher incrementally short term support levels. Current price action this morning has demonstrated a range between 17.25000 and 17.32000 and speculators should not expect this value band to hold. The USD/ZAR may be ready to display choppy volatility near term. If the 17.33000 juncture is broken higher, the 17.38000 mark could be challenged rapidly and this could prove an important inflection point for traders to consider.
Speculators may have difficulty persuading themselves which trading position should be taken today. Global risk appetite has been steady, although the last couple of days have seen major equity indices internationally trade with mixed results. However, there has not been a large selloff, which indicates investors may be trying to catch their breath.
As always many USD/ZAR traders will glance at the value of gold to try and attempt to create insights regarding their decision-making process. The precious metal remains volatile and has lost value the past day, which does not make a speculative selling position of the USD/ZAR an easy choice. However, the past month of trading for the USD/ZAR and the value of gold has produced poor correlations. What technical traders may want to look at is a one month chart of the South African Rand.
Since the 10th of August, the USD/ZAR has actually created a solid trend lower. After hitting a high water level of 17.77700 bearish momentums have certainly been generated. While speculators may have a hard time convincing themselves that risk-reward should be geared towards selling the USD/ZAR short term, a buying position within the current price range is a difficult choice too. Traders should be patient.
If a trader wants to buy into the USD/ZAR they should aim for a high target possibly near the 17.38000 to the 17.41000 junctures to cash out winning trades. If a trader wants to sell the USD/ZAR they should target the 17.23000 to 17.20000 price range to place take profit orders. Speculators should expect choppy trading the next couple of days for the South African Rand.
South African Rand Short Term Outlook:
Current Resistance: 17.38000
Current Support: 17.20000
High Target: 17.52000
Low Target: 17.10000
