USD/ZAR: Five-Day Surge Higher Makes for Nervous Conditions

Robert Petrucci

The USD/ZAR is trading near important mid-term resistance levels as the Forex pair’s trend produces nervous technical conditions.

 

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The USD/ZAR is trading within shouting distance of important resistance levels not touched since early January. The past five days within the USD/ZAR have produced higher moves, and in fact, since the middle of February, the Forex pair has delivered rather strong upwards surges. Since February the 24th, when the USD/ZAR was trading near lows of 14.4700, the Forex pair has likely harmed speculators who have continued to look for the long-term bearish trend to reemerge.

Technically, the USD/ZAR is trading within a precarious level as it hovers near the 15.37000 mark. Resistance levels were tested early today near the 15.55000 ratio and the important level of 15.60000 was not touched, but this highest level should be watched by traders because it was hit in early January, and the last time this value demonstrated sustained trading was in the second week of November.

If the junctures of 15.60000 to 15.65000 are tested above and produce more tests of highs, the mid-term range of the USD/ZAR could be called into question and cause nervous sentiment to be triggered within investors and speculators. However, if resistance above proves durable, this may actually cause speculators to believe that an opportunity lurks which can be taken advantage of. The question speculators need to gauge is if there is a fundamental shift developing within the USD/ZAR, or if the recent surges higher are part of natural cyclical moves within Forex.

The USD/ZAR has tracked lower in trading today after hitting highs. Support near the 15.31000 level is technically interesting, because if this juncture proves vulnerable, the next level that is likely to be focused on is the 15.22000 mark. Looking for this amount of ground to be generated today may prove to be too greedy for short-term speculators to use as take profit targets if they are selling the USD/ZAR.

However, traders will notice that the 15.22000 level short term does not have a lot of trading between it and the 15.12000 juncture below. This is because late last week, when the USD/ZAR surged higher, it went from 5.12000 to 15.22000 quickly after the 15.10000 resistance level crumbled.

Speculators who want to pursue selling positions of USD/ZAR should be cautious, because they will be wagering against a strong trend which has emerged the past couple of weeks, and risk management should be used. However, from a speculative viewpoint, downside price action may prove more enticing and worthwhile compared to upside potential from the USD/ZAR.

South African Rand Short-Term Outlook:

Current Resistance: 15.49000

Current Support: 15.31000

High Target: 15.58000

Low Target: 15.22000

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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