The USD/ZAR has maintained its bearish stance and has seen some consolidation the past couple of days as support is tested.
The USD/ZAR has been able to deliver a consolidated trading band the past couple of days after achieving a rather sizeable amount of bearish momentum in the past couple of weeks. Long-term support levels are being tested and the USD/ZAR is showing the ability to trade below the 14.50000 juncture, which will certainly excite traders who continue to believe in bearish perspectives.
However, technically the USD/ZAR is fighting against support levels which have proven resilient before. Speculators who are a bit skeptical regarding the USD/ZAR’s ability to maintain its current bearish pace may look at the current values and suspect a slight move higher may be appropriate to wager on. The USD/ZAR’s current value raises an important risk/reward question regarding where the greatest source of movement within the Forex pair will occur short term.
Long-term perspectives are frequently different than short-term insights. Experienced traders know there is opportunity to take advantage of both perspectives and the recent moves within the USD/ZAR make it a prime example for this type of trading consideration. Support junctures of 14.46000 to 14.39000 have proven very durable mid-term and have certainly demonstrated ability for the USD/ZAR to reverse higher.
Wagering against the current trend should be done with caution. If a trader wants to buy the USD/ZAR at its current levels, close stop losses should certainly be used. Speculating on long positions should also not be overly greedy and traders need to be willing to cash in winnings relatively quickly. It is possible the USD/ZAR could remain consolidated and provide only short-term moves higher, so using take-profit orders is imperative for traders. If a reversal higher gains momentum, a trader can then re-enter buying positions and try to catch additional movements higher.
However, the recent consolidation of the USD/ZAR also may be indicating that mid-term support which has been tested before and held might prove vulnerable this time around. If the USD/ZAR is able to traverse lower and break its current support levels and sustain values near the 14.40000 mark, it may lead bearish speculators to suspect long-term lower values seen early in 2020 may be ready to be tested.
South African Rand Short-Term Outlook:
Current Resistance: 14.58000
Current Support: 14.46000
High Target: 14.70000
Low Target: 14.39000