The USD/ZAR has produced stabilized trading the past couple of days, but speculators should remain cautious and know storms may develop.
The USD/ZAR has come off highs produced early last week as financial houses apparently have calmed and believe that conditions in South Africa are beginning to ease. After hitting a high of around 14.78000 on the 14th of July, the USD/ZAR has begun to incrementally test lower values. However, a low of about 14.33000 on Friday has seen slight bullish momentum demonstrated yesterday and today. The current price of the USD/ZAR is around the 14.55000 juncture.
Traders need to acknowledge the difficulties taking place as South Africa grapples with political and community unrest. However, the past few days of trading also highlight that the USD/ZAR does have a large amount of institutional transactions which likely believe in an optimistic outcome. The current price range of the USD/ZAR opens the opportunity for speculators to weigh their perceptions and wager on short-term directions.
While the USD/ZAR has certainly seen a large amount of bullish activity develop the past month-and-a-half within the Forex pair, the move upwards caused by the turmoil in South Africa the past week-and-a-half has created volatility which may be running out of power. If a trader believes that resistance levels will now begin to prove durable, it may be worthwhile to be patient and conservative and sell the USD/ZAR on moves higher, which technically look like they should produce reversals lower.
Resistance around the 14.60000 level has proven to be strong in the short term, so placing a cautious selling position slightly below this level while looking for reversals lower could be a solid game plan. If a trader is more aggressive and believes bearish momentum will continue to be demonstrated short term and that the current price levels may not test the higher ratios, then a speculator is advised to use a nearby limit order and get into the market it they are looking for quick-hitting trades which target nearby support.
South Africa is likely to remain in the news in the coming week as media pundits add their opinions to any developing news from the region. This may be enough to keep the USD/ZAR within its current price range which will allow short-term speculators a chance to trade based on perceived momentum as they try to take advantage of reversals. The 14.50000 could prove to be interesting support and a level which buyers feel could produce moves higher. Traders of the USD/ZAR need to remain alert technically and also keep their ears attuned to any sudden news which may emerge from South Africa.
South African Rand Short-Term Outlook:
Current Resistance: 14.60000
Current Support: 14.52000
High Target: 14.68000
Low Target: 14.44000