The USD/ZAR has delivered another round of swift reversals in March, but intriguingly remains within a known price range that speculators may be able to find an advantage.
The USD/ZAR enters the month of April with the apparent ability to reignite some of its long term bearish trend. However this has not come without a fight. Speculators have witnessed swift reversals in the USD/ZAR as it has continued to test known higher resistance levels and low support ratios. A look at a three month chart compared to a one month chart of USD/ZAR highlights the fluctuations the forex pair has provided traders.
Intriguingly the USD/ZAR not only continues to deliver rather strong reversals, but also the ability to pursue short term trends within the bigger scope of long term sentiment. The 15.00000 mark continues to be fought over and has proven to be a psychological inflection point, but as of this writing during the last days of March the South African Rand has shown ability to trade below the juncture. The question is if bearish momentum can be sustained or if a sudden reversal higher will once again challenge higher resistance levels.
Fundamentally global risk appetite remains relatively optimistic, but the USD also demonstrated a tendency to be stronger in early March even as its underlying value suggested weakness long term. Technical the USD/ZAR has been able to traverse towards the lower realms of important support levels, but has not been able to break through them. However the same can be said for the USD/ZAR’s resistance levels which have proven adequate. This leaves traders with the potential to pursue short term trends which target limited profits with quick hitting trades until a vital support or resistance level is broken.
Until momentum is fully established within the USD/ZAR it may be best to use the 15.00000 juncture as a barometer and look at technical capabilities to sustain short term momentum. If trading can be maintained below the juncture traders looking for selling opportunities should not be too greedy and choose targets which cash out winning positions quickly. The use of stop losses will be important too, but traders need to perhaps create a wider stop loss ratio which is actually further away compared to their take profit ratios.
The long term prevailing trend of the USD/ZAR however continues to show that bearish activity has been durable. While resistance levels have certainly been tested they have not broken and since the 10th of March a high of 15.10000 has proven rather adequate within the USD/ZAR. The brunt of volatility higher in the USD/ZAR occurred when US treasury market was hit with volatility. However the South African Rand was not alone in this fight against the USD.
The USD/ZAR has correlated rather well compared to many other forex pairs. Traders with the belief the USD/ZAR will now begin to show more of a tendency to display bearish momentum may be proven correct in April.
South African Rand Outlook for April:
Speculative price range for USD/ZAR is 14.40000 to 15.59000.
The USD/ZAR continues to deliver rather swift reversals which are relatively within a wide trading range. Support junctures of 14.85000 to 14.65000 remains rather adequate, but if broken lower the 14.52000 to 14.47000 levels should be monitored, if this lower mark falters the 14.40000 ratio could be tested.
Resistance has seen definite tests as the USD/ZAR has produced wicked surges higher with abrupt volatility. If the 15.00000 mark is broken and trading is sustained higher the next level to focus on is 15.09000, if this juncture proves weak the 15.18000 to 15.22000 values will come into target for traders. If resistance continues to prove vulnerable the 15.27000 price should be watched and if it doesn’t hold a test of 15.50000 could evolve quickly.