The trading waters within the USD/ZAR have remained turbulent the past week. Since late August the South African Rand has produced strong reversals higher after important support has been tested near the 16.60000 level. The value of 16.60000 has been broken lower but the 16.55500 mark has proven resilient as critical support.
In mid-July until late in the month, the USD/ZAR did challenge the 16.40000 levels below, but August trading saw a new range established and in fact saw a high near 17.70000 around the 9th of August which set off a rather consistent downward trend again. Last week’s trading did test the 17.00000 juncture as resistance and it proved capable. The USD/ZAR is within the midst of a dynamic short term range which will entice speculators who feel comfortable trading long and short positions as they try to take advantage of quick trends.
The current price vicinity of the USD/ZAR is hovering above important support, but the 16.65000 to 16.7000 has proven hard to break downwards in a strong manner. Traders with bearish sentiment may want to see sustained trading within this price range before trying to sell the USD/ZAR. Yes, speculators may be tempted by the notion that after a couple of failed attempts to break the 16.60000 level lower that this indicates a breakout downwards is imminent.
However, the recent price history of the USD/ZAR has shown that trading below the 16.55000 juncture has been tough to sustain. Traders may actually be tempted to seek reversals higher within the current price band and hope for another upwards thrust from the forex pair.
Global risk sentiment appears steady this morning. The price of gold has been slightly positive. These would typically be interpreted as solid signals for a stronger South African Rand. However, selling the USD/ZAR in the short term would be going against the mid-term history of the forex pair which has shown a consistent ability to see selling diminish slightly below its current price levels and for buyers to become active.
Buying the USD/ZAR near the 16.70000 level and looking for reversals higher may prove a tempting short term speculative trade.
South African Rand Short Term Outlook:
Current Resistance: 16.93000
Current Support: 16.60000
High Target: 17.16000
Low Target: 17.03000
