The USD/ZAR has seen a bullish surge create havoc the past week for speculators who have been pursuing downside price action without proper risk management. The South African rand has joined a long list of major currencies which have lost value against the US dollar in recent days. Traders need to calmly adjust their perspectives short term and be patient. Speculators may believe that the USD/ZAR has to reverse lower, but yesterday proved this is not an easy forecast, because choppy conditions have produced whipsaw results.
In early trading this morning, the USD/ZAR continued to mount a fight higher, but the trend was seemingly brought to a halt at least for a while and slight bearish movement has been produced. The USD/ZAR is challenging values it has not traversed since November. The long-term bearish trend of the USD/ZAR may not have been killed the past five days of trading, but it certainly has been tested with the climb upwards, which has brushed aside resistance levels with relative ease.
Technical traders should ask how much more upside momentum can be accomplished and what timeframe this change of direction will last. They should also ask if any of the above really matters. The most important thing short-term traders need to address is how to make money via the moves of the Forex pair. Sentiment regarding the mid-term or long-term direction of the USD/ZAR is helpful, but it actually can be problematic when sudden bursts of counter-intuitive trading are demonstrated.
Short-term traders should use support and resistance levels as a way to enter limit orders. The climb of the USD/ZAR higher now needs to find a calm equilibrium. Until the USD/ZAR finds tranquil values, traders should expect some volatility. Traders should be cautious short term and use take profit orders wisely. They should not look presently for big trends to emerge.
It could very well be that a new mid-term trend is developing now, but before it gets a ‘stamp of approval’, traders can still try to look for short-term cyclical reversals within the USD/ZAR’s current value range. If the USD/ZAR does break above the 15.79000 resistance level, this could be a warning sign that the Forex pair may challenge higher values seen in early November and late October, but until then, speculators may want to simply pursue quick-hitting trades looking to take advantage of reversals.
South African Rand Short-Term Outlook:
- Current Resistance: 15.64000
- Current Support: 15.40000
- High Target: 15.79000
- Low Target: 15.24000
