Weekly Rand price chart looking ominous
In the below article we take a technical view of the Dollar against the rand (USD/ZAR) on a weekly chart.
Long term trend reversal for the ZAR
The weekly chart of the US dollar against the rand (USD/ZAR) is painting an ominous picture at present. The shaded area on the chart, referred to as an inverse head and shoulders pattern (in technical analysis terms), is synonymous with the expectation of a longer term trend reversal.
In the current USD/ZAR context, the pattern suggests a longer term change in trend direction from down (dollar weakness / rand strength) to up (dollar strength / rand weakness). Should the suggestion from the pattern come to fruition, R16.35/$ and R17.15/$ respectively become the initial upside targets from the reversal.
Short term ZAR strength
However, circled red we see a bearish price reversal forming. This pattern while not yet complete (as the week on which it is formed is still on the go as at the 1st of December 2021), suggests a short term retracement for the USD/ZAR before further gains are realized. R15.35/$ becomes the initial support target should the pattern complete.
How to position for trade on the ZAR
Against the US dollar, the technical indications suggest short term ZAR strength before longer term ZAR weakness. Traders might look to buy into a near term pullback towards the R15.35/$ level, targeting a retest of the R16.35/$ mark longer term. A break above R16.35/$ would see traders further targeting the R17.25/4 to R17.35/$ range.
Should the currency pair instead move below support (trendline) currently assumed at R14.80/$, the bullish indications would no longer carry validity and would be deemed to have failed.
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