Resistance levels have done their job for speculators within the USD/ZAR having produced consistent reversals downward.
The South African Rand has gained value since the start of July, but before you join a parade it should be noted the range of the USD/ZAR has remained very steady. Support levels do appear vulnerable for the USD/ZAR and have produced solid downward short term momentum. However, the 16.9000 juncture has proven strong and provided bounces upwards. The past five days of trading have seen a range between 16.9000 and 17.4000 rather consistently.
However, what should intrigue speculators is that resistance up above near 17.5000 has been rock solid for a month and a new resistance level of 17.4000 could provide short sellers an opportunity to look for reversals lower. The price of gold remains near record territory, but admittedly it has lost a bit of value in early trading this morning. This does not mean the precious metal is about to develop a bearish trend though because many concerns still haunt global investors who like the safe haven of the metal.
The range of the USD/ZAR has been steady and this has been achieved even as concerns statistically about coronavirus remain rampant in South Africa. The steady combination of rather strong risk appetite in the global markets and a taste for gold gives the South African Rand some fundamental strength to lean up against and the capability to fight for better values.
The relatively strong and consistent resistance level of the USD/ZAR lends itself to further speculative positions in which selling may prove to be a good short term trade. If the month of June serves as practical guide speculators may believe support levels are more vulnerable right now compared to the resistance levels above, targets of 17.1000 look legitimate and if this support falters 17.0000 and 16.9000 will certainly be focused on quickly.
Speculation is the name of the game for the USD/ZAR and its rather stable range offers traders an opportunity to test the consolidation taking into consideration current global sentiment. Traders who can enter the USD/ZAR with solid entry values using technical charts while looking for a downward movement may continue to justify their short positions. The notion that resistance appears to be rather strong short term also adds fuel to the fire and gives cause for a trader to short the USD/ZAR.
South African Rand Short Term Outlook:
Current Resistance: 17.4000
Current Support: 17.0000
High Target: 17.6000
Low Target: 16.8500