Technical Tuesday

USD/ZAR

The USD/ZAR produced a bullish price reversal off the 18.80 level, although is currently moving lower. Traders who are long into the move might consider using a close below the 18.45 level as a stop loss indication, targeting a move back towards 18.80 and 19.20 respectively.

Traders who are not long might instead hope to see a bullish reversal above the 18.45 level before looking for new long positions on the currency pair.

Should the price instead move to close below the 18.45 level, a long bias to trades on the currency pair would no longer be favoured.

Spot Gold

The price of gold remains in a long term uptrend, although is now trading deep into overbought territory. Traders who have been long into the move might consider locking in profits at current levels or trailing their respective stop loss levels to a close below a one day low.

New long positions might be considered into a consolidation or pullback from overbought territory closer to one of the labelled levels of support on our chart.

Should this scenario present itself we will update guidance accordingly with targets and failure levels.

Brent Crude Oil (Weekly)

The price of brent crude has started to rebound out of oversold territory since touching the 59.80 support target. The long term downtrend remains firmly in place.

Traders respecting the longer term downtrend might look to find short entry into the commodity should the rebound start to falter and reverse course. That is provided that the price does not break back above trend line and horizontal resistance at the 75.45 level. 59.80 again becomes the initial downside support target, a close below this level would assume 47.00 as a further support target from the move.

Newgold Issuer vs AngloGold Ashanti

The pair considers a Long Newgold position against a Short AngloGold position. The net result of these combined trades looks for an 12.5% profit margin. A stop loss is considered of equal proportion to the expected gain.

A successful pair trade can be realized 1 of 3 ways:

1. The long position rises while the short position falls
2. The long position rises faster than the short position rises
3. The short position falls faster than the long position falls.

The blue line on the chart represents the Newgold / AngloGold Bank ratio which recently traded more than 2 standard deviations below the mean (middle line). A successful trade would require the ratio (blue line) to return to the mean to meet the guided profit target.