USD/ZAR – Dollar Takes a Hit Below Support vs Rand
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- USD/ZAR out of pattern and under support
- Will need to firm up soon else more losses likely
USD/ZAR out of pattern and under support
For a few weeks USD/ZAR was holding up and staying above support, but the past couple of weeks have brought selling and the breaking of the 2016 spike-high level eyed as crucial for a congestion pattern to continue building. It is not clear yet that this necessarily means more weakness, but things will need to turn higher quickly if that is to not be the case.
A rally from here could be an important tell as to whether the level seen as support previously (17.76) will turn into a point of resistance for sellers to lean against. A test and turn back down would give added conviction to shorts for more potential retracement price action to unfold.
It is possible that USD/ZAR turns higher very soon in a meaningful way and starts filling out a much larger bull-flag pattern, but this possibility will take some time before growing legs. There would likely be a couple of sizable swings involved along with several more weeks of time to pass first.
For now, risk/reward isn’t particularly favorable for shorts given the extended nature of the current slide, but that could change on a test of the area around 17.76. A turn down may give shorts the upper hand. On the flip-side, longs without any strong levels of support, also don’t hold great appeal. All-in-all, the sidelines looks like the best play to be at the moment.
USD/ZAR Daily Chart (watching how a bounce unfolds)
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---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.