USD/ZAR: Reversal Testing Mid-Term Support, Volatility Grows

Robert Petrucci

The USD/ZAR has moved lower again in early trading, extending a reversal lower which has seemingly gained momentum and created volatile conditions.

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The USD/ZAR moved lower this morning and important mid-term support is being tested. The USD/ZAR is traversing a price level not seen since the 24th of September. After falling through the 15.00000 juncture on the 12th of October and being able to sustain prices below this crucial psychological parameter yesterday, the USD/ZAR has seen additional selling demonstrated and is suddenly threatening to become bearish.

The 14.74000 ratio is now being challenged and, if this support level legitimately falters, traders may anticipate a move towards the 14.70000 mark. The USD/ZAR is within a dangerous trading area right now and speculators need to use their risk management wisely and monitor the current price range. Global Forex and major international equity indices are showing signs of nervousness. The stark jump in the value of gold late yesterday signals volatility is ready to strike.

The USD has been strong the past few weeks in Forex and the USD/ZAR hit a high of nearly 15.25000 on the 30th of September. Skeptical traders who believed the USD/ZAR was overbought at those heights have perhaps made solid profits selling the pair. The question now is if current support levels will hold and if the bullish momentum the USD/ZAR has been experiencing since the middle of September will resume again, or if the selloff demonstrated the past two days is an indication the current reversal will turn into a stronger trend.

Selling pressure is certainly being displayed as of this writing and the USD/ZAR support levels are being pushed downwards with a flurry of trading.  If the 14.710000 ratio doesn’t hold back the tide, traders may believe the 14.69000 to 14.63000 ratios are legitimate near-term targets. Speculators who believe the selling within the pair has been too strong may believe there this is an opportunity to actually buy the USD/ZAR, but they should use carefully chosen stop-loss orders.

The USD/ZAR is within a dynamic price range and speculators will have to judge their perceptions to help guide their decisions. Traders should anticipate fast market conditions near term, and be willing to pursue quick-hitting trades that take advantage of short-term reversals the USD/ZAR is likely to produce.

South African Rand Short-Term Outlook

Current Resistance: 14.77000

Current Support: 14.71000

High Target: 15.87000

Low Target: 14.63000

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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