The USD/ZAR has been able to maintain its bearish stance the past few days of trading. While important support levels have been tested and proved momentarily vulnerable in some instances, the USD/ZAR has also exhibited an ability to generate upward reversals which certainly should remind traders that one-way avenues regarding trends seldom exist short term. As of this morning, the South African Rand is near the 16.56000 vicinity and the short term support level of 16.51000 has proven adequate.
Global risk appetite has experienced bumps along the road. Last Friday’s trading proved volatile for a small duration upon the news of President Trump’s illness. The USD/ZAR like all forex pairs saw a quick spike and tested resistance near the 16.8000 level. However, when investors grew calm and trading returned to a normal pace, the USD/ZAR then began to traverse lower and resume its bearish momentum.
As the USD/ZAR tests support levels within this bearish trend, speculators should remember too that the 16.40000 to 16.50000 levels have generated reversals higher before. In mid-September, the USD/ZAR briefly challenged the 16.10000 mark before experiencing a sharp move higher. These reversals higher happened in July and August too when different values within the 16.20000 to 16.50000 levels were tested. Speculators may be tempted to chase further downside momentum, but they should acknowledge that the USD/ZAR since late May has traded largely between the 16.50000 and 17.50000 junctures.
So is this time different, will the USD/ZAR finally begin to see sustained trading below the 16.50000 level? Traders may want to practice caution with the current price action of the USD/ZAR near term. While the bearish trend may look attractive, skeptical speculators may be tempted to look for a reversal higher again. Buying the USD/ZAR near the 16.50000 level may feel like you are standing in front of the trend, but it may also be a rather logical wager considering the mid-term trading characteristics of the South African Rand which appear to be nearing values which may generate reversals again.
If you choose to speculate with buying positions of the USD/ZAR use your stop losses wisely and also note that if global risk appetite increases significantly that the forex pair may find additional momentum downward. However, buying the USD/ZAR within a price range of 16.5000 to 16.55000 and seeking upside reversals may prove worthwhile for the adventurous.
South African Rand Short Term Outlook:
Current Resistance: 16.60000
Current Support: 16.48000
High Target: 16.72000
Low Target: 16.38000
