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USD/ZAR – US Dollar Set Up to Decline vs South African Rand

USD/ZAR – US Dollar Set Up to Decline vs South African Rand

2020-01-22 12:05:00
Paul Robinson, Currency Strategist
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USD/ZAR Highlights:

  • USD/ZAR turning lower from confluent resistance
  • Rising wedge price action breaking, kicking off move lower

The first couple of days this week saw USD/ZAR running up against stiff resistance coming from several angles; the downtrend line from October, horizontal level extending over from September, and the 200-day MA.

Both days resulted in minor reversals, which suggests that the area around 14.50/60 is indeed a difficult one to clear. Adding to the trading bias is the generally negative tilt to the chart since around the middle of last year.

Dialing in on the 4-hr time-frame, further strengthening the case for shorts is the breaking of a rising wedge formation that developed since the January 2 low. The choppy, narrowing price action points to an expansion in volatility that should begin to develop with the underside trend-line having just broken overnight.

There is some support around the 14.35 line to watch, but there might not be a lot of support on a downswing until several trend-lines are met that are running through the 14.08/13.97 vicinity. The distance from here to support offers up a good amount of potential profit for shorts, while the stop-out point (above yesterday’s high at 14.5972) is close enough to make risk/reward favorable with a ratio in excess of 1:2.

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USD/ZAR Daily Chart (turning down from confluent resistance)

USD/ZAR daily chart, turning down from confluent resistance

USD/ZAR Charts by TradingView

USD/ZAR 4-hr Chart (breaking the rising wedge)

USD/ZAR 4-hr chart, breaking the rising wedge

***Updates will be provided on the above thoughts and others in the trading/technical outlook webinars held at 1030 GMT 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 each week for the Becoming a Better Trader webinar series.

---Written by Paul Robinson, Market Analyst

You can follow Paul on Twitter at @PaulRobinsonFX

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

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