Since the last report the price did reverse around the R13.30/$ level (circled red), before producing a strong rally to trade through both upside targets, accelerating this directional move after the release of the South African Mid-Term Budget speech by Finance minister, Malusi Gigaba. Being strict to the guidelines of the last update, the price did close below R13.30/$ before the reversal we were hoping for took place. As a result, if it was deemed that the pullback was too deep some traders might have missed out on the long entry and in turn the short term rally which followed. The bullish price reversal combined with the stochastic crossing out of overbought territory were however powerful bullish indications in line with the new uptrend we have been highlighting over the last few weeks.
In our last report it was highlighted that:
- The USD/ZAR pullback could be providing the new opportunity for long entry
- We were looking for a bullish price reversal from before the R13.30/$ mark
- In that scenario, the short term high at R13.86/$ became the new initial upside target favoured, followed by the original resistance target of R13.98/$
- A close below the reversal low was suggested for use as the failure level
- If the currency pair moved below the R13.30/$ mark before a bullish reversal occurred, it was suggested that the long entry idea would need to be reassessed as the uptrend might have lost significant momentum