USD/ZAR Highlights:
- USD/ZAR so far holding onto tremendous gains
- Further congestion will do the pair some good
USD/ZAR so far holding onto tremendous gains
USD/ZAR is holding up quite well so far despite the enormous rally it had during the first quarter. If the US Dollar can continue to hold and digest in bullish fashion, then another set of new highs versus the Rand look to be in the cards.
Not long ago we were looking at weakness possibly taking the pair down to the 2016 spike-high, but so far not even enough selling has come in just to take it back to that point. The 17.76 line is still eyed as important support and would make for a good floor for a high-level base to develop should it get tested.
Some time moving sideways is the ideal scenario here. For one, it will allow a time correction to run its course even if price doesn’t necessarily work off extreme overbought conditions. Secondly, a base will help traders define risk for another potentially solid long trade.
For now, traders may be best served sitting tight and seeing how price action unfolds. This could come in the shape of rectangle between 17.76 and the monthly high at 19.34, or if price action starts to contract it could push price towards the apex of a wedge.
Or, we may just see a new squeeze to new highs without the set-up we are looking for. In any event, price is behaving bullishly. To turn this view upside down we would need to see some real selling pressure come in that isn’t accompanied by much of a bounce along with a firm break of the 17.76 level.
USD/ZAR Daily Chart (pulling back to 2016 spike-high)
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---Written by Paul Robinson, Market Analyst
You can follow Paul on Twitter at @PaulRobinsonFX
