Early volatility has hit the USD/ZAR as the 15.0000 support juncture has been brushed aside with fast conditions prevalent.
The USD/ZAR has delivered a challenging trading environment the past month as choppy conditions and tests of resistance have been on display. Speculators who have been pursuing bearish moves within the Forex pair have certainly had to be careful and choose their positions wisely as higher values persisted. However, in early trading this morning, the USD/ZAR has proven that strong remnants of its long-term bearish trend still remain.
The 15.00000 juncture early this morning has been brushed aside and, when it was penetrated, a swift move downwards ensued. The current price of the USD/ZAR is traversing near the 14.94000 mark, and if this vicinity can be sustained and the value of the Forex pair remains below the key psychological 15.00000 inflection point, speculators may be ready to hoist their bearish banners again and sell.
As recently as the 21st of January, the USD/ZAR traded near the 14.73000 mark, but it did produce a strong reversal higher. Traders who are targeting values below are cautioned not to get too greedy and cash in winning positions if they develop. The short term may remain choppy and there is a possibility that this morning’s move downward could suddenly end. However, speculators are right to suspect that the bearish trend of the USD/ZAR will be reignited and they should monitor current conditions alertly.
The USD/ZAR has certainly produced strong reversals upwards and contrarian traders may believe the downward action within the Forex pair this morning is actually a buying opportunity. Certainly, a buying position with a short-term target of 14.99990 cannot be faulted, but in order to make this trade work, speculators are advised to have their take profit orders entered and ready.
However, traders who want to sell into the bearish trend which has been exhibited this morning may believe that a potentially bigger move lurks on the selling side for the USD/ZAR. Support near the 14.88000 juncture should be watched carefully; if this level proves vulnerable, it could signal that a bigger move downward is going to emerge. Sellers should not expect the entire bearish move to recapture all lost ground from the previous month in one day of trading. Some patience is advised and traders should carefully look to see if current values can be sustained, which may signal additional bearish momentum.
South African Rand Short-Term Outlook:
- Current Resistance: 15.02000
- Current Support: 14.88000
- High Target: 15.14000
- Low Target: 14.74000