The USD/ZAR is providing a consolidated trading range and is testing support and resistance levels with a rather consistent demeanor which may give the advantage to speculators. Resistance slightly above the 16.70000 level has proven to be strong, while support around the 16.43000 juncture has worked well. The question traders need to consider is if this rather choppy value band can hold. As you likely guessed, I am here to warn you to be prepared for a potential breakout.
Calm trading conditions are comfortable, but they are also frightening because forex trading is not a polite affair in many cases. Particularly some forex pairs are noted for providing sudden bursts which are not only volatile but perplexing. You do not have to be a rocket scientist to see risk appetite has reappeared in the global equity markets. The USD/ZAR has a habit of astonishing traders who are unprepared for sudden bursts.
The problem for speculators who want to sell the USD/ZAR is the rather strong value of the South African Rand already as it hovers near important support levels it has seemingly proved incapable of puncturing lower. The mark of 16.50000, 16.40000 and 16.30000 have all provided push back recent and caused reversals higher which will lead many to believe the current value of the USD/ZAR is resting within an accepted equilibrium and will not go much lower.
Speculators who believed the USD/ZAR would produce slight reversals higher the past couple of days have likely been rewarded if they have been patient and taken advantage of support levels and embraced buying positions. However, now may be the time to sell the USD/ZAR. It appears risk appetite may remain steady near term and traders may want to test if the South African Rand can generate enough momentum to challenge lower support levels. While the current support ratio of around 16.565000 is close, it also looks rather vulnerable under current trading conditions.
The limited short term range within the USD/ZAR means traders may not have the ability to simply wait on limit orders to get into the markets, they can certainly try to do this but they may miss an opportunity to speculate. Selling the USD/ZAR near the 16.57000 to 16.60000 range and looking for downside action via short positions is a tempting perspective today.
South African Rand Short Term Outlook:
Current Resistance: 16.71000
Current Support: 16.56500
High Target: 16.79100
Low Target: 16.48300
