Since our last report the USD/ZAR did experience a shallow retracement reaching a low of R13.90/$. Circled black we see a bullish engulfing candle reversal which confirmed the end of the pullback. The Blue triangle shows a short term triangle consolidation which is considered a bullish continuation pattern i.e. the pattern alludes to the trend which preceded it as setting up to continue (in this context the uptrend). This trend is now continuing and we have further technical validation for supporting the uptrend. Once again, we accept that the currency pair is overbought but the validity is overridden by the uptrend consideration. The USD/ZAR has not yet reached the first upside target of R14.50/$ having fallen around 6c short thereof.
In our last note we were
- Not considering the overbought signal as an opportunity to trade gains the prevailing uptrend
- But rather looking for a pullback to around R13.86/$ for a new long entry, but considered a shallow pullback even more bullish for the USD/ZAR pair
- We were targeting R14.50/$ and R14.80 as the favoured resistance targets