This pair continues to see a bit of selling pressure, as the downtrend continues to be a massive factor in this market.
USD/ZAR
The US dollar initially rallied against the South African rand to kick off the trading session on Friday but continues to struggle at the 16 level. The 16 level, of course, has been important multiple times over the last several trading sessions and it does make a certain amount of sense that we would struggle in this area. Fading short-term rallies continues to be the best way to play this market, as the interest rate differential will continue to favor the South African rand over the US dollar in general.
Ultimately, this is a market that I think probably goes looking toward the 15.5 level, but it is a market that grinds. It doesn't typically have massive movements on any particular day and therefore, you have to be cognizant of the fact that this is more or less a trend trading, and not a market that you trade in from a short-term outlook.
Identifying Significant Resistance
I do like the idea of finding a little bit of a bounce to start shorting and I recognize that not only is the 16-level important, but we also have the 16.22 level which is where the 50-day EMA currently resides. In fact, it's really not until we break above 17 that I would be worried about the overall trend, so we have a long way to go before that becomes any part of the conversation.
Over the longer term, we will more likely than not turn around eventually, but we are a long way away from massive support and in fact, I think given enough time we could find our way down to the 15 level, but that could take several weeks if not months. This is again, not a fast mover, so keep that in mind.