Speculators face a tough decision regarding the USD/ZAR in the short term. The forex pair has certainly established a strong bearish trend, but its current value range may raise questions about trajectory, and if the South African rand may have achieved levels which are considered over-exuberant. In early trading this morning, the USD/ZAR has produced choppy conditions, but it is maintaining a consolidated range.
The consolidation may prove tempting for short-term traders who want to take advantage of the USD/ZAR’s range, which may continue to produce rather tentative price action. Short-term support continues to show a rather strong inflection point near the 15.50000 level. It was punctured lower recently and a test of the 15.20000 vicinity was seen, but a reversal higher to the 15.70000 quickly ensued.
The trading range of the South African rand has grown quieter since yesterday’s early surge higher and a tight value band has developed. It is possible that equilibrium is developing in the aftermath of the strong bearish momentum the USD/ZAR has demonstrated the past few weeks. However, it is also possible that financial institutions are taking a wait-and-see approach regarding global risk appetite in the short term, as equity indices take a breather after the gains made over the past few trading sessions.
The USD/ZAR, however, may have produced a move which anticipated a surge of risk appetite and will now test its current range with a steady diet of reversals. Choppy trading may be magnified near term and speculators may find opportunities looking for reversals by pursuing support and resistance levels.
The USD/ZAR may prove a worthwhile sell if it reaches the 15.60000 to 15.66000 levels. Traders will have to be ready for quick trading to take advantage of conditions which may prove rather cautious, but the notion that the value band of the South African rand may continue to be consolidated near term should help speculative endeavors.
Because of the recent bearish momentum in the USD/ZAR, traders may be more tempted to try to position themselves for further selling opportunities. A challenge of support levels may continue to offer the best risk reward scenario for speculators, but they should also acknowledge that movements may not create long lasting momentum, thus taking profit orders should be placed and ready too.
South African Rand Short Term Outlook:
- Current Resistance: 15.66000
- Current Support: 15.47000
- High Target: 15.80000
- Low Target: 15.25000
