The past few days of trading have seen the USD/ZAR decline with rather strong selling. After Friday’s bearish price action, some traders may have expected a reversal higher to occur yesterday as a natural reaction, but instead, additional selling momentum was found. The USD/ZAR has correlated to the global Forex markets which have demonstrated sudden weakness in the USD, and this is a positive sign for the South African rand.
After suffering for over a month due to the social unrest in South Africa, and the cautious sentiment it produced within financial institutions which need to trade the USD/ZAR, the Forex pair has begun instead to mimic other major currency pairs again instead of trading within its own nervous vacuum. The USD/ZAR is currently testing important mid-term lows and if the price can be sustained below current resistance levels, it may add speculative attractiveness to the potential belief another leg lower may develop.
As of this writing, the USD/ZAR is near the 14.60000 level with resistance and support levels nearby. Current support for the USD/ZAR technically appears to be values not seen since the 10th of August. After hitting a high of nearly 15.40000 on the 20th of August, the bearish momentum displayed since then has been large.
Support near the 14.58000 region looks interesting, and if it is put to the test 14.56000 and lower marks could certainly come into view. Traders should be careful about not being overly greedy with their speculative positions considering the USD/ZAR last traded near the 14.50000 juncture on the 6th of August. They should use take profit ratios effectively to get out of positions when profits are made.
The USD/ZAR has proven extremely challenging the past month of trading. While many speculators and financial houses correctly believed the USD/ZAR had been overbought, wagering against the Forex pair has only started to produce steady movement downwards in the past ten days.
The bearish trend of the USD/ZAR is enticing, but traders should be prepared for natural reversals higher and remember the potential for sudden spikes does remain a possibility. Short-term traders however may want to continue to pursue selling positions of the USD/ZAR with the belief values may be able to traverse prices seen in the early days of August.
South African Rand Short-Term Outlook
Current Resistance: 14.65000
Current Support: 14.56000
High Target: 14.76000
Low Target: 14.44000
