The South African Rand is being watched by many forex speculators early today. As gold climbs to new highs, questions arise about risk sentiment globally and concerns escalate about the long term health of the international economy, the USD/ZAR has remained within a strong short term range.
The South African Rand has touched important support levels the past few days of trading, but it has also reversed slightly higher as the currency seemingly consolidates and awaits its next potential big move. But there will be a ‘big’ move which breaks out of this range? Or is the South African Rand perfectly situated considering the domestic challenges South Africa faces and the fundamental strength of gold which negates negatives?
News flash, the markets are always right no matter what a trader thinks, the real value of the market is the quantified number that is flashing. Technical trends within the USD/ZAR continue to highlight the currency pair is within a value band that is known and it remains rather stable looking even as gold seemingly gains momentum. However, the recent trend of the USD/ZAR has been bearish the past month.
Support levels near the 16.35000 level proved important last week and a bullish reversal was delivered. However, the resistance level of 16.8000 did hold and selling swiftly ensued. Early trading this morning has seen the USD/ZAR begin to touch important short term support again. The current value range of 16.52000 to 16.58000 is being tested.
Typically if risk appetite is faltering the USD is gaining on safe-haven trading. The short term may support buyers of the USD/ZAR, but how strong can a bullish run of the US Dollar against the South African be if the value of gold is so strong? How long can a bullish run sustain itself?
Speculators may want to consider these two questions, and they may believe the USD may not be able to sustain a bullish trend. Speculators who feel the South African Rand has the potential to continue its bearish trend may have their stamina tested in the short term, but selling the USD/ZAR around 16.55000 to 16.60000 with limit orders and carefully selected stop-loss ratios above could produce profitable trades if selling of the forex pair reinvigorates and support near the 16.40000 to 16.450000 junctures are targeted again.
South African Rand Short Term Outlook:
Current Resistance: 16.65000
Current Support: 16.50000
High Target: 16.80000
Low Target: 16.40000
