In early trading this morning the USD/ZAR is hovering near vital support and speculators may be enticed to pursue its bearish trend.
The 16.41000 price vicinity for the USD/ZAR is in focus and this level is important because it has proven to launch strong reversals higher before. However, after a handful of tests near this support level speculators may be allured by the potential of the South African Rand to finally break through this juncture and pursue further bearish momentum.
Global risk appetite is a mixed bag currently; US equity indices have put in an impressive couple of days and have maintained their high values. Gold is also showing a renewed push higher and is developing a slightly short term bullish trend. However, traders also know the US elections are approaching in about two weeks are starting to impact sentiment and causing cautious trading to be exhibited too. While the USD/ZAR trades near vital support levels, speculators should consider the potential for dark shadows to suddenly emerge as a way to guard against euphoria.
Risk-taking though is part of being a speculator in forex. The USD/ZAR has touched its current price vicinity before in October and almost always has produced a reversal higher. Therefore a conservative trading approach would be to actually buy the USD/ZAR near its current price levels and look for upside action which would take advantage in theory of technical charts which have proven adequate when the current support levels have been more than adequate.
Traders looking for more bearish action to transpire and want to sell the USD/ZAR have an arsenal of justifiable reasons too. The middle of September did see the South African Rand vanquish support near the 16.40000 mark and test the 16.10000 juncture below before a strong reversal upwards was generated. Speculators need to ask themselves where risk-reward is now and how they can profit most effectively.
While downside momentum may look enticing, it may be that the best and likeliest move for the USD/ZAR is for another burst of bullish behavior to develop near term. The value of 16.40000 may be perceived as fair market value and a juncture which spurs on buying of the forex pair and allows it to comfortably test short term resistance above near the 16.52000 level without great fanfare.
South African Rand Short Term Outlook:
Current Resistance: 16.52000
Current Support: 16.37000
High Target: 16.71000
Low Target: 16.27000