- The US dollar has initially pulled back against the South African Rand during trading on Tuesday, only to turn around and show signs of life again.
- By doing so, the market has ended up forming a bit of a hammer as we are basically just hanging around the crucial 18.25 level.
The day EMA continues to be an indicator that a lot of people will be watching closely as market participants have seen both buyers and sellers in this general vicinity. With this, I think you have to look at this through the prism of a market that has been very noisy, now it is trying to figure out where to go next, and with the 50-day EMA above, I think that offers a short-term resistance barrier. Breaking above that opens up the possibility of a move to the 18.60 level, an area that previously had been significant selling pressure should now open up the possibility of a move much higher, perhaps to the 19 level, maybe even the 19.20 level.
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Stagnant Action?
Holding back at this point in time will more likely than not continue to bring in quite a bit of buy on the dip mentality near the 18 South African Rand level. I do think that this is a good proxy for risk appetite as traders continue to look at this through the prism of a market that is trying to determine whether or not risk appetite will continue, and you also have to keep in mind that there is the possibility of sanctions on South Africa from the Americans, as suddenly South Africa is part of the political conversation. I think at this point, we probably will continue to try to grind around this area and sort out where to go next. I think this is going to be a very choppy and noisy condition as far as markets are concerned.
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