Speculators have plenty of evidence that technically the USD/ZAR has enjoyed a serious bearish trend mid-term and is testing important support levels. However, the past few days of trading have begun to see a fight emerge for value as a consolidated range emerges. After enjoying a strong winning streak downward, bearish momentum may be running out of steam short term.
Impressively the USD/ZAR does continue to challenge important support and, as of this morning, it is shadowing the 15.00000 juncture. Last week, the USD/ZAR was able to trade below the important psychological mark of 15.00000 and did test support below near the 14.87000 levels, but the Forex pair than staged a reversal higher and actually broke through short-term resistance and traded near highs of 15.17000 late last week.
Traders who want to pursue bearish momentum may remain optimistic regarding their outlooks because of the ability of the USD/ZAR to fight its way lower again. The USD/ZAR’s ability to prove resistance was adequate, and not retesting the 15.20000 to 15.27000 levels above may be a signal that the bearish trend remains intact and is ready to fight on.
Short term, however, the USD/ZAR may have to prove that it can penetrate the 15.00000 mark below and sustain values beneath this juncture for more bearish momentum to build. In the meantime, speculators who see the 15.00000 actually holding as support may be tempted to look for short-term upside action with quick-hitting buying positions, which seek profits by targeting the 15.10000 level if the USD/ZAR remains choppy. This morning’s trading has seen some bearish momentum reignite, but the Forex pair has been unable to mount a sustained downward attack and this is where speculators may grow suspicious of current price action technically.
Global risk appetite does remain rather solid, and if international markets continue to display a taste for buying equity indices, the USD/ZAR will likely remain correlated to this behavioral sentiment. Traders should also note that this will likely be the last full week of large transactional volumes because the holiday season is nearly upon us.
This means trading conditions will turn potentially volatile next week. Institutional trading via financial houses and governments may be heavy the next few days. Traders should expect choppy conditions to remain for the USD/ZAR short term. If resistance continues to prove strong, it may signal that more bearish momentum will develop, but until then, be ready to take advantage of quick short-term reversals.
South African Rand Short-Term Outlook:
- Current Resistance: 15.09000
- Current Support: 14.94000
- High Target: 15.17000
- Low Target: 14.87000
