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USD/ZAR is currently testing support via a trend-line from March, along with support running back to June and the neckline of a head-and-shoulders pattern. It’s a firm area with all three varying support types in close proximity, so for the moment it is to be respected as solid support.
But should we see a solid breakdown (close below 13.95) then look for another leg lower to develop towards the July low around the 13.10-mark. Stops placed above all levels (old support, new resistance - ~14.25) should remain out of harm’s way if USD/ZAR is to sink in-line with expectations.
This will provide close to a 1:3 risk/reward ratio on swing trades. Those looking to play the set-up with shorter-term objectives can use the broader break as the signal to trade along the path of least resistance (i.e. – sell failing rallies and consolidation patterns).
These 4 tenets can help bolster your Confidence as a Trader.
USD/ZAR Daily Chart (Support needs to break first)
***Updates will be provided on these ideas and others in the trading/technical outlook webinars held on Tuesday and Friday. If you are looking for ideas and feedback on how to improve your overall approach to trading, join me on Thursday’s for the Becoming a Better Trader webinar series.
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---Written by Paul Robinson, Market Analyst
You can follow Paul on Twitter at @PaulRobinsonFX