Today’s USD/ZAR Signals
- Risk 0.50%.
- Trades must be entered prior to 5pm New York time today.
Short Trade Idea
- Go short following a bearish price action reversal on the H1 timeframe immediately upon the next touch of 18.6617.
- Put the stop loss 1 pip above the local swing high.
- Adjust the stop loss to break even once the trade is 20 pips in profit.
- Take off 50% of the position as profit when the price reaches 20 pips in profit and leave the remainder of the position to run.
Long Trade Ideas
- Go long following a bullish price action reversal on the H1 timeframe immediately upon the next touch of 18.2690 or 18.0159.
- Put the stop loss 1 pip below the local swing low.
- Adjust the stop loss to break even once the trade is 20 pips in profit.
- Take off 50% of the position as profit when the price reaches 20 pips in profit and leave the remainder of the position to run.
The best method to identify a classic “price action reversal” is for an hourly candle to close, such as a pin bar, a doji, an outside or even just an engulfing candle with a higher close. You can exploit these levels or zones by watching the price action that occurs at the given levels.
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EUR/USD Analysis
In my dollar to rand prediction today, I note the following:
- The price has been rising within a symmetrical bullish price channel for days, suggesting a reliable if slightly short-term bullish trend which is likely to continue until something significant happens.
- The price action has been exhibiting a clear sequence of higher lows and higher highs, which is another bullish sign.
- The price is not far from making a new 3-week high and has room to rise to 18.6617 before it hits a key resistance level, although the upper trend line of the current price channel is lower than that, at 18.5250 right now, which could also provide resistance.
- The US Dollar has been on a bullish run mirroring the recent price action here, suggesting the current move is dollar and not rand driven. However, the US Dollar Index is currently turning bearish in a key resistance zone, suggesting that we might see a bearish reversal here.
- Although the US Dollar is showing signs of likely technical bearishness, this may be unreliable as markets are currently gripped by risk-off sentiment which is leading to a major selloff in stocks, and this may have the effect of strengthening the US Dollar anyway.
Taking these factors into consideration, I think there is good scope for a long trade following a bullish bounce at 18.2690 which is a support level, or even at the lower trend line of the price channel. I also see a possibility for a longer-term short trade entry following a bearish reversal at the upper trend line of the price channel, or even better, at the resistance level of 18.6617 – however, this latter level is not likely to be reached today.
Concerning the USD, there will be releases of US Advance GDP and Unemployment Claims data at 1:30pm London time. Regarding the ZAR, there will be a release of South African PPI data at 11:30am.
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