The USD/ZAR is within the depths of intriguing early August support junctures and is challenging July ratios too. As of this writing, the USD/ZAR is near 14.20000 and turned in a low of approximately 14.16800 late yesterday. Traders who have been fortunate enough to ride the bearish trend may be getting nervous within these depths and wondering if they should start to look for reversals higher. However, the USD/ZAR continues to demonstrate an inability to produce a volatile drive upwards, which may indicate further declines will proceed.
As current support levels are within clear sight and are certainly key mid-term lows, traders should consider the notion the USD/ZAR was overbought during the past month-and-a-half as it struggled with domestic issues which made financial houses rather nervous. While the domestic issues of South Africa have certainly not been solved, it appears the ‘reports’ which were stirred by media have been digested and this has allowed the USD/ZAR to technically correlate with the global Forex conditions.
The steady and incremental bearish trend which has been generated consistently since the 20th of August now sees the USD/ZAR within sight of pre-social unrest values. If the USD/ZAR can legitimately trade within the 14.10000 to 14.20000 in the coming days, this would be a potentially strong catalyst for further technical consideration that the Forex pair may be able to continue declining to lower depths.
Traders should not be overly ambitious and acknowledge the USD/ZAR could certainly reverse higher, but the temptation to believe the pair has additional selling power existd. If current support near the 14.16000 level falters, speculators cannot be faulted for being attracted to the 14.10000 juncture. Contrarians may believe the price velocity via its bearish momentum has been too fast and a natural reversal must occur. While it is certainly true reversals higher always happen, the question is if they will significantly fracture current resistance levels.
If resistance near the 14.26000 mark is able to be maintained and prove durable, the USD/ZAR could be signaling another leg down can be sparked. Cautious traders may want to wait for slight reversals higher to see if nearby resistance levels remain strong. Selling the USD/ZAR as a short wager and looking for the potential of another wave of bearish activity near term may prove worthwhile.
South African Rand Short-Term Outlook
Current Resistance: 14.26700
Current Support: 14.16000
High Target: 14.37000
Low Target: 14.06000
