The past five days of trading have seen the USD/ZAR halt the bullish trend which emerged in late July. However, the forex pair remains within the higher price range of its one month chart. Trading in the South African Rand yesterday began to see a slight surge of US Dollar buying, but upon hitting resistance near the 17. 53000 level some selling was demonstrated.
Speculative trading within the USD/ZAR remains high because of correlations with the price of gold which continues to withstand whipsaw price action and challenge higher values. As of this morning, the precious metal is again trading above the 2000.00 USD per ounce level. However, traders should also note that the past three weeks have clearly shown the USD/ZAR does not act in tandem. Short term and speculative positions based on the perception that gold and the South African Rand move in unison can be dangerous and costly.
Interestingly, since the 10th of August when the USD/ZAR traded near the 17.80000 juncture, a bearish reversal has been reestablished. One week of trading results however does not mean a dynamic shift has been officially sanctioned. The current price action of the USD/ZAR near the 17.50000 could prove critical in the short term, if trading values sustain themselves above this juncture it could mean another test of resistance is about to develop.
However, speculators who seek to choose a direction still may be inclined to suspect a bearish trend will continue to mount within the USD/ZAR. Resistance around the 17.60000 to 17.70000 looks like it could provide an interesting place to set stop-loss orders if a selling position is being pursued within the current price action of the market. Shorting the USD/ZAR within the 17.48000 to 17.55000 vicinity may be an opportunity to test the waters and speculate that more bearish momentum will be established near term.
As pointed out before, correlations between the South African Rand and gold can prove to be costly mistakes when attempting to speculate. However, traders need to gather their perception somehow; technically it appears the USD/ZAR in the short term may not be able to sustain its slight bullish trend which developed yesterday. Selling the forex pair may see a spark downwards be produced again if risk sentiment remains steady globally.
South African Rand Short Term Outlook:
Current Resistance: 17.55000
Current Support: 17.40000
High Target: 17.62000
Low Target: 17.30000
