USD/ZAR: Strong Reversal Higher After Lows Established

Robert Petrucci

The USD/ZAR has traded higher this morning, but this has occurred after the Forex pair tested lower targets before going into the weekend.

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The USD/ZAR is traversing near important mid-term resistance levels this morning after a slight rise higher. But before traders try to hop onto the bullish momentum, they need to consider the fact that the USD/ZAR once again hit an important technical juncture before going into the weekend. A low of 14.13900 was touched momentarily on Friday which tested values not seen since the middle of January in 2020.

Upon touching this lower depth, the USD/ZAR then traded higher and essentially tested the 14.50000 mark. After closing near 14.45000 on Friday, the USD/ZAR has moved again towards the 14.50000 level which confronts the decisions of speculators regarding direction. The last time the USD/ZAR was near its current heights in a sincere trading mode was on the 14th of April. Strong resistance can be interpreted from one-month technical charts near the junctures of 14.54000 to 14.56000; if these values are penetrated higher, it could certainly set up a test around 14.62000.

Speculators who believe that upside momentum will continue in the short term may be inclined to be buyers slightly below the current levels of the USD/ZAR and look for quick-hitting trades which use take-profit orders. However, cautious traders who believe that bearish sentiment will remain intact and that Friday’s reversal higher was merely a reaction to the USD/ZAR testing important support levels may believe that prices near the 14.50000 to 14.54000 marks are solid places to activate selling positions.

The USD/ZAR is at an important juncture, and the 14.50000 will likely prove to be an important inflection point. If the price of the Forex pair can establish a definable range short term today within its current vicinity, it could be setting the stage for additional bearish momentum to emerge. Yes, support below the 14.20000 level has proven difficult to puncture. However, from a risk/reward perspective, there appears to be more territory to traverse downwards, taking into consideration present support and resistance levels.

Selling the USD/ZAR may be a worthwhile speculative wager short term. The volatility sparked upwards on Friday may have been a natural reaction to important support levels once again being tested. The cyclical move up and the ability of the USD/ZAR to remain under important mid-term resistance levels as of this morning may signal that another bearish trend will develop.

South African Rand Short-Term Outlook:

Current Resistance: 14.56000

Current Support: 14.45000

High Target: 14.64000

Low Target: 14.21000

USD/ZAR

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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