- During the early hours of Monday, we pulled back to reach the 18 level only to turn around and show signs of life again.
- All things being equal, this is a market that continues to be very noisy.
- I think you have to look at it through the prism of a market that is simply trying to figure out what to do next.
With this being the case, I think we see a lot of sideways action that probably continues at least for the time being. The market is currently hanging around the 200 day EMA, which is somewhat flat, but the fact that we've been able to break above it multiple times suggests that perhaps we are trying to change the overall trend. The 18.4 level above I think is a major barrier and if we can break that it opens up a move to the 18.65 level.
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If We Break 18 to the Downside
If we were to break down below the 18 level, then you could see the 17.8 level tested where the 50 day EMA currently resides. And then a more serious level of 17.60. This is a good look into emerging market currencies. As a result, I do think that we're trying to get back up to the previous consolidation area between 20 and 18.5 or so, but we have some work to do to get there.
We could turn around and therefore I think you've got a situation where this is a market that I think you're probably looking at dips as potential buying opportunities, mainly due to the fact that the inflation in America could pick up a little bit and that could drive the US dollar higher as well. That being said, I think that a lot of traders are also in the process of taking profits from shorting this USD/ZAR pair, as the end of the year will bring money management professionals to the markets to collect and report to the clients that they represent.
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