The past five days of trading within the USD/ZAR has produced a price range of 16.9000 to 17.5000. In early trading this morning the South African Rand has gained some value as the USD/ZAR has been sold. It should be noted that the price of Gold in early trading this morning has risen too slightly and that the precious metal has been able to maintain a steady value.
The rather stable range of the USD/ZAR continues to lend itself to speculative positions which allow for the testing of support and resistance levels based on technical and overall market sentiment. Resistance for the USD/ZAR remains strong near the 17.400 to 17.500 levels and traders may feel comfortable enough with these junctures to attempt short positions within these values. Trading conditions appear choppy, however, so proper risk management will be needed if a short position is placed.
Short term support for the South African Rand appears vulnerable near the 17.2000 level with the potential for further downside moves if the USD/ZAR is sold. Overall global market sentiment may see risk appetite increase going into the weekend, but traders should know that the last couple of hours on any given Friday can produce volatility which is not often welcomed.
The South African Rand is trading near weakened values it has not experienced since early June. Yesterday’s decrease in value for the South African Rand was not enormous, but it was sudden and the volatility should serve as a reminder that risk management can protect a trader if they are on the wrong side of a trade.
Before going into the weekend, traders should ask themselves how much they want to speculate and what their own risk appetite is. The South African Rand is trading near its weakest boundaries and now may be an opportunity to seek a reversal via a selling position of the USD/ZAR. The short term trend has highlighted a weaker South African Rand, but if risk appetite remains optimistic in the global financial markets the US Dollar may find itself being sold against many major currencies in forex. As the day progresses a reversal for the USD/ZAR with selling pressure may develop.
South African Rand Short Term Outlook:
Current Resistance: 17.4500
Current Support: 17.3000
High Target: 17.6000
Low Target: 16.9000
