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Rand price forecast: long-term weakening trend broken

The USD/ZAR has now started to trade back below the 200-day simple moving average.

Source: Bloomberg
Forex South African rand USD/ZAR Currency pair United States dollar Market trend

Written by

Shaun Murison

Shaun Murison

Senior Market Analyst

Article publication date:

USD/ZAR technical update - 14 July 2023

Source: Bloomberg

The USD/ZAR has now broken down from the bear flag consolidation highlighted in our previous note (Tech Tuesday 11 July) and traded through the 18.40 and 18.15 support levels.

The move lower also sees the price of the currency pair trading below the 200 day simple moving average (200MA) (blue line). The move below the 200MA now assumes the longer term uptrend to be broken and now a sideways trend is considered. Should the price move to break below the major low at 17.70 then only might we consider a new longer term downtrend for the USD/ZAR.

The currency pair is now trading in oversold territory, although the price has not yet given us confirmation that the short term decline has ended. For an indication thereto we would like to see a bullish price reversal before the 17.70 support level. A reversal, supported by a move out of oversold territory would be preferred before looking for new long entry positions on the currency pair. In this situation 18.15 and 18.40 would become upside resistance targets, while a close below the 17.70 level or reversal low (depending on threshold for risk) might be used as a stop loss indication for the trade.

USD/ZAR technical view - 11 July 2023

Source: IG Charts
Source: IG Charts

The USD/ZAR remains in a long-term uptrend. In the short term we do however see the price now breaking down from a bearish flag formation (highlighted grey).

The suggestion from the downside break out of the bear flag formation is for a short-term decline in the USD/ZAR. 18.40 and 18.15 become downside support targets from the move.

As the long-term trend remains up, traders might hope for short term weakness to end around one of the labelled support levels before looking for long entry.

Only on a move below the 200MA and 17.70 support level (major low) would we reassess our long bias to trades on the currency pair

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CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 71% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work, and whether you can afford to take the high risk of losing your money. Clients can lose more than they deposit. All trading involves risk.

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