USD/ZAR: Strong Tests of Support Produced Reversals Higher

Robert Petrucci

The USD/ZAR continues to produce choppy trading and is now testing important resistance levels and likely getting the attention of speculators.

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The USD/ZAR opened yesterday’s trading with a solid test of support levels near the 14.50000 level, which then saw a prompt reversal take place higher. What is noteworthy regarding this trading was that the movement lower yesterday took place on solid volumes, but as the USD/ZAR traversed higher volumes, apparently were not as large. As of this writing, the Forex pair is challenging pre-Christmas resistance levels and the 14.91000 value may be a target for speculative buyers.

The USD/ZAR has been within a strong, long, bearish trend and its ability to create a higher reversal the past day is a healthy sign within Forex. What traders should look out for is the 14.91000 juncture to see if it can fight off tests of its value, or if the resistance mark is penetrated and the 15.00000 level than becomes the next target. If the USD/ZAR proves that resistance levels can sustain the current value of the Forex pair near term, it may be a signal that bearish momentum will re-establish itself quickly.

The move upwards the past day has come on the heels of mixed global risk appetite short term. Trading within the USD/ZAR has also been affected by volumes which are still below the average trading amounts via financial and commercial enterprises as they return from their holidays and monitor market conditions before placing their own orders.

While trading of the USD/ZAR may create additional movement upwards, speculators with experience may be tempted by resistance levels getting tested and look at those values as a place to trigger selling positions to short the market. The bearish trend of the USD/ZAR is likely not over and the past day of trading needs to be looked at via technical charts, which continue to show that more downside momentum can be potentially generated.

Traders may want to be short-term buyers of the USD/ZAR and try to take advantage of its slight bullish rise, but they should have take profit orders working to capture their profits so they do not have to watch their gains evaporate. Speculators who believe the USD/ZAR will reignite its bearish momentum may need to be patient short term and it is advised they use limit orders near resistance levels to sell.

South African Rand Short-Term Outlook:

  • Current Resistance: 14.91000
  • Current Support: 14.75000
  • High Target: 15.10000
  • Low Target: 14.56000

USD/ZAR chart

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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