The USD/ZAR has come off highs made three days ago and is testing important support early today as consolidation builds.
The USD/ZAR is bouncing along important short-term support levels in early trading today, after coming off highs produced a few days ago. The USD/ZAR is still languishing within a higher value band compared to its lows seen in the middle of December. The current value of the USD/ZAR may look attractive to speculators who have been pursuing the long-term bearish trend.
Current short-term support near the 5.18000 mark should be watched closely by traders. Technically, this value may prove to be an important inflection point and, if it is broken lower, traders may eye targets below. Speculators who choose to be sellers of the USD/ZAR may also believe that the recent surge higher by the Forex pair has lost momentum, and if the 5.18000 juncture is brushed aside, the 15.00000 may become a focus.
The long-term downward trend of the USD/ZAR has been strong, and bearish momentum the past two months has been equally impressive. The past week of trading certainly saw a bullish reversal emerge, but the past two-and-a-half days of trading has incrementally seen resistance levels lower and support quickly proven vulnerable. Traders who do decide to short the USD/ZAR still need to manage their positions with stop losses to protect against potential cyclical short-term moves higher.
However, from a risk/reward perspective, it appears that selling the USD/ZAR has the greater potential for speculative profit. The move higher last week in the USD/ZAR should be viewed with a wide lens, and traders should note that the South African rand was not the only currency which lost values to the USD during the short-lived bullish cycle. Like other major currencies, the South African rand has reignited bearish momentum recently against the USD.
If the USD/ZAR can sustain its current value near the 15.27000 mark and prove that resistance levels are adequate near 15.32000, the Forex pair has the capability to be a worthwhile speculative selling opportunity. The recent price action of the USD/ZAR has created a higher price band which technical traders may view as imbalanced, and see potential for further bearish momentum to develop which could reclaim lost values within the 15.10000 to 15.0000 without too much fanfare.
South African Rand Short-Term Outlook:
- Current Resistance: 15.32000
- Current Support: 15.18000
- High Target: 15.41000
- Low Target: 15.02000