Key levels for the Rand
In this article we look at how the macro environment is reflecting technically in the rand, identifying key levels and short term targets for the domestic currency against the majors.
Better than expected local economic data (Gross Domestic Product data in particular) as well as an improved global risk appetite has seen short term strength returning to the ZAR. In this article we look at how the macro environment is reflecting technically in the rand, identifying key levels and short term targets for the domestic currency against the majors.
The USD/ZAR has produced a downside break (circled red) of the short-term range between levels R15.05/$ and R15.55/$. The breakout has seen the currency pair move back to the R14.55/$ support level. A close below this level (R14.55/$) would consider the R14.25/$ level as the next support target.
The USD/ZAR does however appear oversold at present and trading a short position from current levels considers an unfavourable risk relative to reward.
However, should the price manage to hold above support at R14.55/$ and the stochastic cross back out of oversold territory, traders might consider looking for long positions. In this situation, R15.05/$ becomes the upside target, while a close below the R14.25/$ might be used as a stop loss consideration.
R14.55/$ remains the key level at present and indicative of the short-term trend bias. Sentiment around the USD/ZAR remains bullish above this level and bearish below.
GBP/ZAR
The GBP/ZAR currently trades in oversold territory around the R18.20/GBP level. Below this level the next levels of support are considered at R17.70/GBP and R17.25/GBP respectively.
In lieu of the oversold signal we prefer to wait for a long opportunity on a bullish price reversal at either the R17.70/GBP or R17.25/GBP support levels, or alternatively on a firm price close above the R18.20/GBP level. A bullish price reversal at one of these levels would be given further credence if accompanied by the stochastic moving out of oversold territory.
EUR/ZAR
The EUR/ZAR has found support at the R16.10/EUR level. The candle highlighted red shows an intraday price reversal this level. The bullish reversal is supported by the stochastic crossing through its signal line in oversold territory. R16.70/EUR becomes an upside resistance target from the bullish reversal signals. Should the EUR/ZAR instead move to close below the low of the candle circled red (R15.90/EUR) the bullish indications would be deemed to have failed and R15.65/EUR would be the next level of support considered for the currency pair.
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