The past week of trading has seen rather stable for the USD/ZAR and its rather tight value band should raise suspicions that the forex pair may be about to produce volatility. Since the 10th of August the USD/ZAR has seen plenty of bearish sentiment and in early September the forex pair has seen the juncture of 16.55000 challenged twice and fail to puncture support lower.
The past two trading days for the USD/ZAR has seen a strong reversal higher emerge and resistance levels be broken. The 17.0000 value has come into sight the past day, but so far proven to be strong and push the USD/ZAR lower again. Speculators should look at the 17.00000 juncture as a crucial inflection point for the USD/ZAR.
Risk appetite in the global markets is nervous. Equity indices have seen negative results and this is certainly weighing on investor sentiment as financial institutions have become cautious. What should strike speculators as interesting is that the USD/ZAR has not reacted with strong volatility the past few trading sessions.
The USD/ZAR has shown an inability to break through important support levels below and has now begun to seen bullish behavior develop short term. Speculators may be inclined to believe if global market conditions worsen near term, that buying the USD/ZAR may be an opportunity to take advantage of an anticipated move higher. From the beginning of August until the 24st of the month, the USD/ZAR traded in a range largely between the junctures of 17.0000 to 17.50000. If global equity indices remain challenged near term and find it difficult to produce higher values, the USD/ZAR may begin to show signs of buyers stepping in as a risk adverse move.
Traders should understand there is a significant difference between short term and long term outlooks when speculating. Speculators can believe the long term remains positive for the South African Rand and that it will again challenge support levels below via the USD/ZAR. However, short term traders can also look at resistance levels and perceive they are vulnerable due to current market conditions.
Buying the USD/ZAR near the 16.90000 mark and seeking a target slightly above the 17.0500 resistance level may be the right decision today.
South African Rand Short Term Outlook:
Current Resistance: 17.05000
Current Support: 16.85000
High Target: 17.16000
Low Target: 16.76000
