The rand report

Uptrend bias for USD reinforced by Mid Term Budget Statement.

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 

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. 

The next upside targets favoured are located at R14.50/$ and R14.80/$ respectively.

Looking at the current picture of the USD/ZAR pair, the upward trend bias is now confirmed as up. The short term gains have moved the pair into overbought territory. This is not an indication to trade against the underlying uptrend, but if a sideways consolidation or pullback does occur, this is once again considered as an opportunity for long entry. The current pullback level we are looking at for long entry would be around the $13.86/$ level.  There might still be an opportunity for long entry if the pullback is shallower, however this will be updated in future rand reports should the scenario occur. 

This information has been prepared by IG, a trading name of IG Markets 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. See full non-independent research disclaimer and quarterly summary.

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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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