Speculators within the USD/ZAR have another opportunity standing in front of them to test trends today. Late last week the South African Rand broke through support and challenged the 16.10000 level momentarily, but as often happens within forex a sudden a strong reversal ensued and has lasted into early trading this morning.
The 16.50000 level is now being tested by the USD/ZAR and resistance looks vulnerable above and traders may suspect the 16.52000 juncture is a legitimate target. The important question for the USD/ZAR is whether the forex pair is suddenly going to develop a real bullish move higher, or if the current trading is just a natural progression within its bearish trend which has emerged since the 10th of August.
Global risk appetite appears rather muted this morning and US futures indicate equity indices will open with negative moves. However, the price of gold has also continued to decline, which makes for a complicated scenario to consider. It is quite possible Friday’s selloff in US equities was part of a natural trading cycle. Markets do not trade in one direction; there will be days when negative activity dominates.
The USD/ZAR has experienced a solid bearish trend and its move may not be over yet. Speculators need to access their perceptions carefully. The USD/ZAR has proven to produce reversals higher after important support levels have been tested before; this has proven to be the case late last week and into today’s trading. Now the question is if the sudden bull momentum will be sustained short term. Traders may be tempted to use limit orders and buy the USD/ZAR at the 16.50000 juncture and speculate that the forex pair will try to fill in a quick decline which happened on the 15th of September when the value of the USD/ZAR went from approximately 16.60000 to 16.5000 with a sudden move. Traders looking for a leg up will want to watch the 16.57000 level closely; if this mark is punctured a test towards the 16.60000 could happen fast.
However, speculators who want to continue to pursue the bearish trend of the USD/ZAR may have plenty of logical reasons also. The USD/ZAR may still have plenty of room to test downside momentum and if the 16.52000 resistance level holds another downward move may be likely near term.
South African Rand Short Term Outlook:
Current Resistance: 16.52000
Current Support: 16.33000
High Target: 16.61000
Low Target: 16.15000
