The USD/ZAR continues to battle extremely important support ratios as the key inflection point of 16.10000 lurks nearby. The USD/ZAR has hovered above this key support level for days and speculators should know the value of 16.10000 has triggered reversals higher over the past handful of months on an almost regular basis. However, as the US election begins and its result remains unknown, traders also must factor in the potential for volatility creeping into the USD/ZAR rapidly.
While the USD/ZAR has certainly produced a solid bearish trend it has not been able to puncture support lower. Sustained trading within the current value band of the USD/ZAR may prove extremely enticing for risk takers with the unknown outcome of the US vote thrown into the mix. The notion that risk adverse sentiment could create an impetus for a sudden short-term bullish run higher in the next day should be considered. However, because the USD/ZAR has also shown the ability to trade near important support it may be evidence the South African Rand is going to find additional bearish momentum and challenge junctures below.
Oddly, the USD/ZAR has lacked volatility the past month; the forex pair has produced a comfortable trading range. The question speculators need to consider is if the current price band will remain within its equilibrium or if a break out is ready to ensue? No matter the answer, traders should also recognize the inherent dangers that will prevail in forex over the next forty-eight hours as financial institutions react to results from the US election. Traders need to be suspicious of the USD/ZAR.
Short-term trading ranges will fluctuate the next day and speculators may be inclined to believe risk adverse trading will dominate the landscape, including the price action of the USD/ZAR. Traders may want to look for short term challenges to resistance as nervous global markets react to fear of the unknown. This affect may only last quickly and traders need to be ready for price swings which could be swift. Interestingly, the price of gold remains rather lackluster and may serve as a temporary restraint on any strong bearish sentiment emerging short-term for the USD/ZAR.
The name of the trading game the next two days may be ‘reversals’. Speculators need to pay attention and potentially look for resistance to be tested over the next day and, if a clear winner is proclaimed via the US election for President, another challenge of current support levels to occur.
South African Rand Short-Term Outlook:
Current Resistance: 16.24000
Current Support: 16.09000
High Target: 16.47000
Low Target: 15.94000
