USD/ZAR Highlights:
- USD/ZAR consolidation phase may soon give-way to a rally
- Wedge pattern suggests a move over 20 could be in the cards
USD/ZAR consolidation phase may soon give-way to a rally
The price action in USD/ZAR has been bullish despite it going nowhere as of late. It is considered a positive sign that after the run from 14 to over 19 it has undergone only a small retracement and generally held all attempts to sell off.
The wedge pattern being built could break at any time between now and the end of the month. The size of the formation, based on its height, suggests a move to 20 is indeed doable on the next thrust higher, and if the market gets panicky in selling ZAR, that may turn into a conservative target.
On the downside, if USD/ZAR falls below last week’s low at 18.02 the possibility of a wedge formation will be negated, but not all will necessarily be lost. The 17.76 threshold, the spike-high from 2016, has held as the bottom of the ongoing consolidation period. This is considered the floor for now. A hold of that level will continue to extend the digestion phase, but traders will need to be patient in waiting for the chart to strengthen up again.
A break below 17.76 would indeed be reason to flip the bias to lower, though, and should that be the case we will need to adjust our outlook accordingly. For now, carefully watching 19.18/34 for a breakout should price cross over.
USD/ZAR Daily Chart (wedge building)
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---Written by Paul Robinson, Market Analyst
You can follow Paul on Twitter at @PaulRobinsonFX
