The USD/ZAR has run into a large amount of consolidation the past few trading sessions as stable risk appetite and a solid price for gold are balanced by staggering coronavirus statistics and economic worries from South Africa. Resistance for the USD/ZAR appears to remain the 16.8500 level and although it was been tested last week, the juncture proved strong and held. This allows speculators to consider using the range of 16.70000 to 16.75000 as a place to position limit orders, this to sell the USD/ZAR if they want to look for short term downside.
However, traders may believe the possibility of sustained selling with the USD/ZAR is far fetched and a recent test of values within the 16.50000 to 16.60000 levels have only produced bullish reversals upwards. So the question becomes what is your trading outlook? Long term traders who use conservative amounts of leverage and await large momentum moves may believe the South African Rand has the potential to sustain a bearish trend. While short term traders using higher amounts of leverage will be inclined to test technical charts and aim for nearby junctures that have proven to be targets recently.
The tight range the South African Rand has produced in recent trading may prove beneficial for short term traders who need to use nearby stop losses to protect their limited capital. The combination of rather secure looking resistance levels and gold prices which have also seemingly solidified above the 1800.00 USD troy ounce value could prove an alluring enticement to continue shorting the USD/ZAR if the forex pair trades near the 16.80000 levels in a comfortable manner.
Trading is always a two-way street, however, and speculators who believe there is not enough potential downside movement may actually prefer to wait for another test of support levels. This would allow the trader to search for downside movement near the 16.60000 to 16.65000 junctures and buy the USD/ZAR and look for opportunities via potential bullish reversals upwards.
Because of the consolidated action in the USD/ZAR the past week the forex pair needs to have its tight short term range taken into consideration. A tight range is not guaranteed to maintain its calm waters forever, and volatility must always be defended against when trading.
South African Rand Short Term Outlook:
Current Resistance: 16.85000
Current Support: 16.60000
High Target: 16.95000
Low Target: 16.50000
