The past two days of trading within the USD/ZAR have produced a reversal lower which is intriguing. While there certainly are plenty of economic and political concerns regarding South Africa, after hitting rather high water marks not seen since March of this year the USD/ZAR has suddenly generated solid bearish traction. The question for speculators is what will happen in the near term.
After almost hitting the 15.40000 level on the 20th of August, the USD/ZAR has seen selling momentum build. This morning’s trading has taken the Forex pair below the important psychological level of 15.00000 and, if this juncture is able to prove a durable resistance ratio, this could begin to shift sentiment within the USD/ZAR, which had certainly become rather bullish the past month due to the social unrest and concerns that trouble South Africa.
While the technical charts of the USD/ZAR are certainly of interest, another intriguing perspective that should be considered by all traders is that the Forex pair has correlated well to the global market. The USD has suddenly become weaker and the ability of the USD/ZAR to follow this path being demonstrated by other major pairs is a sign of health.
The fact that the USD/ZAR has traded lower like other pairs, while financial institutions are worried about domestic issues in South Africa may be promising for technical traders. If the USD/ZAR is able to challenge the 14.90000 level near term and prove that bearish momentum can generate more power, than there is reason to suspect many will perceive the Forex pair has been overbought the past month.
Traders who are willing to wager on further downside price action developing are certainly making a speculative wager, but it may be the correct decision. The ability of the USD/ZAR to reverse from its ultra-highs which challenged values not seen in five months, and suddenly correspond to the broad Forex markets show that calmer conditions may be returning for speculators.
Cautious traders who want to sell the USD/ZAR on slight reversals higher and look for more bearish momentum to ignite could be making the logical choice. The current price of the USD/ZAR is battling an important support level and, if the 14.90000 mark is challenged today and prices can be sustained near or below this ratio, additional selling pressure may be seen in the Forex pair.
South African Rand Short-Term Outlook
Current Resistance: 15.05000
Current Support: 14.93000
High Target: 15.14000
Low Target: 14.86000
