The USD/ZAR has reestablished its bearish trend with a swift assault of support levels the past two days. In early trading this morning the forex pair has torn through support levels and is testing lows not challenged since early January. The recent ability of the USD/ZAR to maintain durable resistance levels and then puncture the 15.00000 mark below has begun to produce a sustained downward trend.
The question speculators will now ask is if the downward surge will be hit by a reversal higher or if the USD/ZAR is about to actually maintain its ‘new’ value range. In early and mid-December the USD/ZAR traversed its current values and actually tested the 14.50000 mark. However, traders may remain cautious regarding the forex pair because of January’s rather difficult circumstances which saw the South African Rand climb higher in a rapid fashion. The sudden ability of the USD/ZAR to produce strong reversals upwards only a few weeks ago should not be forgotten.
Since the 26th of January the USD/ZAR has incrementally seen its long term bearish trend reemerge and resistance levels have gradually proven capable of incrementally lowering. Current short term resistance levels should be watched carefully and if the 14.79000 mark proves solid, this could indicate further downside momentum is a possibility.
Traders who have maintained their bearish perspectives in the USD/ZAR also need to consider the past two days of results and ponder if the move downward has accomplished too much, too soon. Some traders may be tempted to look for upside potential after such a big move, but if this is the trading decision then stop losses should be used in case the USD/ZAR continues to prove it has more room to traverse below.
Even though the USD/ZAR has proven its bearish track has firepower, speculators may be tempted to look for additional selling opportunities. Support levels near the 14.62000 level may prove a justifiable target, but conservative traders may want to place take profits slightly above this level and be happy with moves lower towards the 14.66000 to 16.64000 junctures near term. The bearish trend of the USD/ZAR has been rekindled and the belief that December lows will be tested again may prove attractive.
South African Rand Short Term Outlook:
- Current Resistance: 14.79000
- Current Support: 14.62000
- High Target: 14.94000
- Low Target: 14.54000
