Only two days ago the USD/ZAR was trading near crucial resistance of 17.20000. Higher values looked vulnerable and speculators had to ponder if the emergence of this bullish behavior was a complete change regarding forex pair’s mid-term trend. However, in the past two days, the USD/ZAR has shown the ability to create bearish momentum and sustain a downward attack. First, the USD/ZAR broke through the important 17.00000 value lower and then it sustained its selling trend.
In early trading this morning the USD/ZAR is within the 16.60000 vicinity and traders have important decisions to make. Suddenly the forex pair is within striking distance of crucial support levels it approached in mid-September and then demonstrated the ability to burst lower and challenge the 16.10000 mark about ten trading days ago.
Speculators need to be careful and use their risk management wisely. The USD/ZAR has proven it has the capability to embrace support levels and flirt with these low values, but it has also provided dangerous quick bursts higher. Reversals have proven profitable for those on the right side of their trades and costly for those caught on the wrong side of price momentum.
Risk appetite this morning is showing signs of igniting. Yesterday’s positive gains on US equity indices was a solid dose of sentiment and early calls this morning from the States indicate via future markets another positive day may be ready to unfold. Gold has also gained incrementally recently and this may be serving as another source of sudden strength in the South African Rand.
However, traders need to ask if the sudden bearish momentum in the USD/ZAR is sustainable. Speculators should access where risk-reward scenarios may serve them the best. The USD/ZAR is challenging important support, but can the forex pair continue to produce downward movement that is going to endure?
Traders who want to speculate against this sudden positive shift of sentiment and believe the USD/ZAR will reverse higher again should be careful near term. While it is likely the forex pair will certainly experience a reversal higher, patience will be needed to potentially capture a bullish trend.
As the USD/ZAR trades before going into the weekend it is likely bearish momentum will test targets below short term, but then may provide an opportunity for those seeking reversals higher based on the notion caution may be practiced as tomorrow’s trading comes to a close.
South African Rand Short Term Outlook:
Current Resistance: 16.73000
Current Support: 16.55000
High Target: 16.84000
Low Target: 16.40000
