USD/ZAR – US Dollar Looks Set up to Bounce vs SA Rand
USD/ZAR down all but handful of days past month
USD/ZAR has been down 14 out of the past 18 days, with the most recent leg into yesterday reaching 8 days down in a row (today it is positive so far). Across the board USD has been sinking vs both developed market currencies and emerging market currencies. It could be against the latter, though, that it mounts it strongest comeback. Especially if we see stocks weaken again and risk tones turn south.
The Dollar isn’t at any strong levels of support vs the Rand, but that doesn’t mean it won’t find natural support via a washed out trend. Looking higher, a rally towards the 17.10 level could very well develop on any initial recovery leg, with it likely taking some time if the trend is to turn around towards recouping losses back over 18. If price reaches that point we might be seeing the beginnings of a trend resumption in favor of the long-term upward path of least resistance.
Should we see only on a minor bounce fail or gain any traction at all, the 200-day is still a good way lower at 15.81, followed by the 2018 high just beneath the moving (effectively the two are in confluence). If USD/ZAR reaches that point during the current sell-off this would make for some pretty extreme oversold conditions in confluence with support – making for a strong backdrop to rally from. It seem unlikely we will see that unfold, however, at this time. But keep in mind if we do get to that point.
From a tactical standpoint, It could be a difficult play for would-be longs if a bounce starts from here, but at the least right now it might be prudent for shorts to button up trailing stops to protect profits.
USD/ZAR Daily Chart (bouncing from oversold)
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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.