The USD/ZAR continues to mount additional highs in early trading this morning as bullish momentum has taken on a rather fast pace.
The USD/ZAR, which was trading at a low of nearly 14.06000 on the 10th of September, is now testing important mid-term resistance levels. A strong and swift reversal higher has occurred in the USD/ZAR and the pair is actually correlating to global Forex conditions. Safe haven trading has taken hold the past few days. Yes, technically the USD/ZAR has traversed past important resistance levels and is still within a known range, but financial institutions are also reacting to nervousness being generated in equity indices, particularly in the US,which have taken on a rather shaky framework.
As of this writing, the USD/ZAR is near the 14.84000 level and important resistance technically can be seen easily via a one-month chart near the 14.87000 mark. If the 14.86500 to 14.90000 ratios begin to be seriously challenged, this could spark the perception that late August values will be targeted, which could ignite additional buying positions. From the 18th until the 25th of August, the USD/ZAR traded above the 15.00000 juncture.
The ability to trade near the 15.00000 level happened nearly one month ago when concerns regarding South Africa’s political and social conditions caused nervousness among financial institutions. While those ‘problems’ still certainly exist financial houses are likely more focused on the notion that US equities and economic data continue to produce rather troubling numbers regarding outlook. Early calls on future markets in the US this morning suggest a rather steep selloff to start the day, which is certainly not adding much positive influence on the USD/ZAR.
The USD/ZAR may appear overbought once again to speculators but they should be careful not to jump into contrarian positions which go against the current trend too quickly. Support levels near the 14.80000 mark have not been seriously challenged in the short term, and the lack of a sincere reversal lower after a strong move upwards may signal that additional upside will develop before a significant move downward occurs.
Speculators who anticipate additional bullish behavior to be displayed near term may be making the correct wager. If the 14.900000 mark above falters and trading is sustained above this ratio, then another test of the 15.00000 is conceivable. Traders should use take profit positions to cash out winning positions if they develop quickly, and the use of stop loss ratios using nearby support levels as protection is recommended.
South African Rand Short-Term Outlook
Current Resistance: 14.86000
Current Support: 14.77000
High Target: 15.03000
Low Target: 14.60000