USD/ZAR: Tight Trading Range and Slight Bullish Trend Emerge

Robert Petrucci

A short-term reversal higher has been demonstrated by the USD/ZAR in the past day and resistance levels are being tested.

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The USD/ZAR continues to trade within its lower price values which it accomplished this November, but yesterday saw a reversal higher after a test of support failed to puncture values below. The current price vicinity of the USD/ZAR is near the 15.56000 mark, which the Forex pair traded near late last week before seeing more bearish momentum emerge on Monday and Tuesday. The resistance levels speculators will likely keep their eyes on are the 15.65000 to 15.80000 ratios. If these junctures prove adequate they may attract further speculative selling positions from traders.

The USD/ZAR has produced a solid bearish trend and, fundamentally, some analysts hold the viewpoint that the downward momentum has reached an important inflection point; meaning, the South African rand may be considered overvalued. The price of gold has slumped in recent trading, but taking a long-term perspective into view, the precious metal is still within the higher boundaries of its value.

Technically, if the current resistance levels do prove adequate, there is reason to suspect another short-term test of support will develop. The USD/ZAR does have the capability to trade lower and the 15.30000 level may prove to be a viable target below. However, speculators will need to ask if the bearish momentum of the USD/ZAR was accomplished in a manner which may have been considered too quick, thus causing the reversals higher.

Technical traders will have to acknowledge that the moves within the USD/ZAR are not happening in a vacuum. The price of the Forex pair is being affected by financial institutions, government fiscal transactions and international commerce. The USD/ZAR has shown a fairly consistent bearish trend since mid-April. Yes, there have been sporadic reversals higher, but remember that on the 22nd of April, the USD/ZAR was trading near the 19.10000 juncture.

The value of the USD/ZAR is now challenging low water marks not seen since early March. The short-term bullish reversal higher has not broken through critical resistance levels and there is reason to suspect bearish price action will be displayed again. Speculators may be inclined to believe yesterday’s slight surge higher provides an opportunity to sell the USD/ZAR and seek another test of support levels below.

South African Rand Short Term Outlook:

  • Current Resistance: 15.65000
  • Current Support: 15.41000
  • High Target: 15.80000
  • Low Target: 15.31000

USD/ZAR

Robert Petrucci
Robert Petrucci has worked in the Forex, commodity, and financial profession since 1993. Important aspects of his work involve risk analysis and advisory services. As an advisor in a Family Office he maintains a conservative approach for wealth management and investments. Robert also works in private finance with investors and companies delivering financial and management services.

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