The South African Rand has exhibited a rather good range for short term traders the past week as its support and resistance levels have proven capable. However, as the week opens the USD/ZAR finds itself near important values, and support of 17.1000 is within eyesight. The South African Rand has recently tested resistance near the 17.5000 mark, but late last week the currency found sellers taking aim at the USD/ZAR forex pair as the value of gold also found new highs.
Traders often ask what the real value of an asset is and this is a mistake. What traders need to ask is what the value of an asset ought to be. The difference is important in the trading world because a trader who speaks about the value of an asset not matching its current price is actually saying the marketplace is wrong. While the price of an asset like the USD/ZAR may have influences which are certainly going to affect the forex pair the important thing to remember is the market is not wrong, because the current price reflects real-time data, emotions, and its correlating sentiment.
As gold trades near highs, speculators may be asking why the USD/ZAR is not finding more sellers. It is a good question and certainly, a solid value for the precious metal should provide a fundamentally stable value for the South African Rand. Yet, questions about political and economic transparency do cloud the picture regarding the value of the USD/ZAR even as gold climbs to new highs.
With current support levels appearing somewhat vulnerable while taking into consideration the value of gold is strong, this leaves the door open for speculators to consider selling positions of the USD/ZAR. A one month chart of the USD/ZAR shows plenty of price action between the 16.6000 and 17.2000 levels and this may remain a valid range of focus for short term traders who believe a stronger South African Rand is justified.
Unfortunately, the USD/ZAR doesn’t only trade per the value of gold. Current global sentiment remains fragile and traders need to watch equity indices internationally to gauge their positions, which gives credence regarding the resistance levels near 17.5000 being tested frequently too up above. The USD/ZAR is offering speculators a suspicious value and it appears ready to test support levels, but traders need to take their positions with solid risk management in place if they want to sell the USD/ZAR. Risk appetite globally will affect the price of the South African Rand.
South African Rand Short Term Outlook:
Current Resistance: 17.5000
Current Support: 17.2000
High Target: 17.6000
Low Target: 17.0000
