Technical Tuesday

USD/ZAR

After a failed downside break, the USD/ZAR has produced a sharp bullish price reversal from around the 18.50 level and from oversold territory. The reversal has taken the price through the 19.00 level and is now testing the 19.10 level whilst in overbought territory.

Traders might look for either an upside break of the 19.10 level for long entry, or a bearish price reversal off this level for short entry.

Should the upside break trigger (confirm with a close above), the 19.30 to 19.40 range provides the upside resistance target from the move, while a close below the 19.00 level would suggest the move to have failed.

Should a bearish price reversal instead form off the 19.10 resistance level, confirmed with a close below 19.00, 18.80 becomes the initial support target, while a close above the 19.40 level might be used as a failure indication.

Spot Gold

The price of gold has continued its uptrend, trading through the 2360 projected (Fibonacci 100%) target and towards the 2488 161% Fibonacci level.

Traders looking for new positions and respecting the uptrend bias might prefer to wait for the first pullback from overbought territory for long entry. Initial trend line support is considered at around the 2300 level.

Brent Crude Oil

The price of brent crude, after twice finding resistance at the 91.30 level, has moved into a short-term triangle shaped consolidation. The longer-term trend remains up.

The triangle shaped consolidation suggests that the uptrend which came before its formation is setting up to continue. Because 91.30 has proven to be resistance twice recently, a close above this level might be needed to confirm a breakout. In this scenario, 95.30 provides the next upside resistance target considered.

In the event of a downside break (close below 87.90), traders respecting the longer-term uptrend might prefer to wait out weakness before looking for long entry at one of the lower levels of support.

Should either scenario present itself, we will update guidance accordingly.

Newgold Platinum (NGPLT) vs Northam Platinum

The pair considers a Long NGPLT position against a Short Northam position. The net result of these combined trades looks for an 20% 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 NGPLT / Northam 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.