The USD/ZAR climbed to two-month highs on Friday, but the Forex pair has since sold off and in early trading today has sustained bearish characteristics.
Short-term trading in the USD/ZAR has been volatile. On Friday, in the midst of financial institutions positioning their trades before the U.S jobs report, the Forex pair achieved two-month highs near the 14.52000 ratio. However, the USD/ZAR has stumbled since these heights and, as of this writing, is near 14.26000. Traders should remember that U.S. financial houses will be largely absent from the Forex markets today, which means volumes will be lighter than normal.
The USD/ZAR has seen a demonstrative bullish trend since the 6th of June. Traders may believe that Friday’s price action may have reached peak levels for higher momentum within the USD/ZAR, and be tempted to test those beliefs with selling positions. However, before traders go into the Forex pair too aggressively, they might want to see what happens the next two days of trading as volumes return to normal and equilibrium is sought.
Bearish speculators cannot be blamed for being suspicious of the higher move within the USD/ZAR the past four weeks, but it might be best to see a couple of other important support levels prove vulnerable before they try to jump on the trend. The junctures of 14.20000 and 14.10000 could prove to be important ratios for the USD/ZAR, but even if those support levels are penetrated today, traders may want to remain cautious until U.S. trading companies return to Forex tomorrow.
Resistance near the 14.30000 to 14.40000 levels may appear compelling for short-term bullish speculators, but take-profit orders should be in place to cash out positions before profits vanish into thin air because of reversals occurring. Traders should expect choppy conditions the next twelve hours as the USD/ZAR tries to find a tranquil price ratio after Friday’s large move higher and then spike downwards. What could prove attractive to bearish traders who continue to carry selling sentiment is the technical notion that the Forex pair has maintained its lower short-term range this morning.
Selling the USD/ZAR continues to look like the more attractive trade for the USD/ZAR. However, traders should be conservative today and understand that a large amount of impetus may come into Forex in the next day which could bring more volatility. Support ratios do look attractive, but proper risk management should be used while pursuing selling positions today in the USD/ZAR.
South African Rand Short-Term Outlook:
Current Resistance: 14.29500
Current Support: 14.23500
High Target: 14.35500
Low Target: 14.18000