The Rand Report

The USD/ZAR long term trend bias up, but overbought in the near term.

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In our last note on the USD/ZAR currency pair we noted false break and bullish price reversal (circled blue) around the R12.85/$ level. We were looking for a break of the R13.15/$ level to unlock a relatively quick move to the top of the medium term range at R13.50.

Since the last report the technical assumptions have manifested quite well as the USD/ZAR currency pair broke the R13.15/$ mark (blue arrow) before moving to and exceeding the R13.50/$ upside target.

The move higher takes the currency out of the medium term range previously highlighted as well as the broader triangle consolidation highlighted on the chart.

The USD/ZAR now also trades firmly above the 20 (red line), 50 (green line) and 200 (blue line) day simple moving averages suggesting the underlying trend bias to be firmly up. The stochastic oscillator is sitting in overbought territory. This suggests that the short term rally might need to catch a breather, but is certainly not an indication to trade against the underlying uptrend. 

From a trading perspective, we are hoping for a price pullback from overbought territory to provide a possible opportunity for long entry. A move towards R13.35/$ is considered the long entry opportunity, while a deeper pullback through R13.15/$ (a close below) would negate the suggested opportunity. The upside resistance target considered is R13.98/$

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This information has been prepared by IG, a trading name of IG Markets Limited and IG Markets South Africa Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. International accounts are offered by IG Markets Limited in the UK (FCA Number 195355), a juristic representative of IG Markets South Africa Limited (FSP No 41393). South African residents are required to obtain the necessary tax clearance certificates in line with their foreign investment allowance and may not use credit or debit cards to fund their international account.

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