The USD/ZAR has reversed violently the past few trading sessions and wiped out what appeared to be strong resistance.
The holding pattern the USD/ZAR was exhibiting the past week and half as it battled important support levels has proven to be a launching ground for a strong reversal upwards. After testing support near the 16.40000 level and not being able to accumulate a significant breakout downward, the South African has lost value to the US Dollar as a short term bullish trend has emerged.
Traders who are not paying attention to the price of gold may suspect the precious metal has lost its luster and value has declined the past few trading days, but this is certainly not the case. Gold continues to challenge record highs and is bouncing up against resistance as of this morning too. Speculators of the USD/ZAR may suspect the current weakness of the South African Rand could prove short lived if the value of gold remains high and displays an energetic trading environment. Concerns about coronavirus continue to make news in South African and this could be affecting sentiment negatively however.
In early trading this morning, the USD/ZAR has continued to trade near important resistance levels. Technical traders certainly have evidence via monthly charts, showing that the USD/ZAR has produced this trading track record before. Around the 22nd of July, the USD/ZAR tested the 16.40000 values only to reverse higher to the 16.80000 level before turning around again and moving lower. The middle of last week saw another test of the 16.40000 junctures but has suffered an obvious reversal higher since.
Stubborn traders who do not believe the current short term trend of the USD/ZAR can continues its buying trend should be watching the 17.10000 to 17.20000 resistance points carefully. For those who doubt the US Dollar will continue to be bought with exuberance against the South African Rand, now may be the time to speculate and look for reversals lower.
Standing in front of trends can prove a very unpleasant experience, but trading is about managing risk and part of the equation is controlling your emotions. Fear is an important and destructive factor when trading. However, selling the USD/ZAR within it current price vicinity of 17.06000 to 17.09000 may prove rather enticing.
Risk management as always, needs to be practiced. If a trader can use stop loss limit orders above near the 17.15000 to 17.20000 junctures, they may find an opportunistic speculative trade to see if a reversal develops into another bearish trend for the USD/ZAR.
South African Rand Short Term Outlook:
Current Resistance: 17.10000
Current Support: 16.95000
High Target: 17.20000
Low Target: 16.70000