In early trading this morning the support level of 16.6000 appears to be developing into an intriguing juncture. The USD/ZAR traded near critical support levels of 16.4000 recently and then saw a rather predictable short term reversal upwards.
Selling pressure in the USD/ZAR remains evident however and there are indications the South African Rand may be ready to test its strength again today and tomorrow. The price of Gold has been strong and the US Dollar is trading weakly within many of the major forex pairs.
Resistance for the USD/ZAR appears to rather strong near the 16.8000 level. This does not mean the resistance level cannot be broken. However, recent trading has shown an ability to use the 16.7000 juncture as a short-selling indicator for traders with a belief the South African Rand will move lower.
The support level of 16.6000 looks vulnerable and this has emerged because the resistance levels for the South African Rand numerically from a technical viewpoint are indicating increased selling in the USD/ZAR. This because the 16.8000 resistance level has shown an ability to withstand attempted reversals and highlights stronger value for the South African Rand may continue to pick up positive sentiment short term.
Traders looking for speculative positions should consider selling the USD/ZAR and look to the 16.4000 mark as a target. If you can enter a selling position around 16.7000 to enter your short position this may give you the ability to use resistance at 16.8000 as a buffer and see if selling momentum creates a profitable leg down.
Global sentiment in the markets continues to be fragile. Stock Indices have been under pressure the past few days in many markets. The U.S Dollar which frequently serves as a safe haven for traders has not drawn its usual crowds the past few days and it may continue to see nervous trading. Meaning now may be the time to wager the South African Rand may track to stronger values and be an opportunity to sell the USD/ZAR using what looks like solid resistance up above and apparently vulnerable support levels down below. Traders need to always be careful and have solid risk management in place, but a choice to sell the USD/ZAR under the current market conditions may be the right call short term.
South African Rand Short Term Outlook:
Current Resistance: 16.8000
Current Support: 16.6000
High Target: 16.9000
Low Target: 16.2000
