USD/ZAR: Consolidation Perhaps Today, Volatility Tomorrow

Robert Petrucci

The USD/ZAR is trading near short term lows as of this writing and speculators need to take a couple of important potential factors into consideration.

The USD/ZAR currency pair is trading near the 1.61100 mark as of this writing, which is near rather intriguing lows. Speculators need to be careful today, because it is a public holiday in South Africa and trading volumes may be lighter than normal. This morning’s early price action did see the USD/ZAR currency pair drop to a depth of nearly 16.57500, which tested support levels seen on Friday before a spike higher was accomplished.

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Public Holiday and Perception of a Potentially Oversold USD/ZAR Could be Dangerous

The lack of extensive transactions coming from South Africa today leaves the USD/ZAR open to the possibility of sudden moves today. And when combined with the technical perception the USD/ZAR may have been oversold yesterday and has consolidated near Friday’s support levels is intriguing. However, traders should be careful today, because while the USD/ZAR has the potential of a consolidated Forex market, the currency pair is vulnerable to value gyrations in a lightly traded atmosphere which could be whipsaw like.

Support near the 16.60000 area could prove to be interesting if sustained

Traders should use entry price orders to make sure they are not filled at a surprising ratio which is completely unexpected today.  Speculators should also be aware that a jump from 16.60100 to 16.63000 in a moment’s notice today should be expected, meaning that stop losses and take profit orders should be working, but that fast results could occur and knock traders out of positions with a blink of the eye. However, importantly what traders should also note is that today’s price action may raise false trending flags due to low volume, also meaning tomorrow’s opening for the USD/ZAR could produce fireworks if a move is overdone today and financial houses ‘correct’ the trend.

  • Quick range trading may be seen today in the USD/ZAR with light volume; traders should monitor the 16.60000 to 16.64000 ratios.
  • If the price range of short term technical support and resistance are broken today, traders need to be prepared for volatility tomorrow when full market action returns to the USD/ZAR.

Ambitious speculators who believe the USD/ZAR has been oversold the past day and that support levels will produce upwards mobility cannot be blamed.  However, because of today’s light trading volume a test of the ‘known’ range may be demonstrated. If a trader wants to buy the USD/ZAR and anticipate a potentially bigger move, they may have to practice patience or be willing to carry a position overnight.

USD/ZAR Short-Term Outlook

Current Resistance: 16.64250

Current Support: 16.59200

High Target: 16.67800

Low Target: 16.55700

USD/ZAR

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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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