The Rand Report

USD/ZAR looks to be reversing out of oversold territory.

In our last report we:

  • Continued to favour further rand weakening against the dollar and maintained R14.50/$ and R14.80/$ as favoured upside targets
  • While the technical view looked bullish, the political uncertainty and upcoming ratings review seem to support the technical indications
  • Concerns highlighted were that the upcoming ANC elective conference may be postponed (not confirmed) and that South Africa could be subject to downgrades of its local currency credit ratings by Moody’s and S&P on the 24th of November
  • Therefore for traders not already committed, short term weakness towards R14.20/$ was considered the first long entry opportunity
  • although we considered any bullish reversals at all the levels ahead of 13.70/$ as long entry opportunities
  • Only a close below R13.70/$ was considered a failure of our bullish assumptions 

Since the last report the USD/ZAR traded through the initial R14.50/$ target before giving back some of its gains. The price has now pulled back to the R13.95 level which appears to be support for now. The USD/ZAR price does look to be attempting a bullish price reversal supported by the stochastic crossing its signal line in oversold territory. From current levels we expect renewed gains for the dollar (weakness for the ZAR) with the initial targets being between R14.45/$ and R14.57/$ (previous closing and intraday short term highs). The longer term target at R14.80/$ remains. We are now using a close below trend line support at R13.80/$ as our failure level (revised higher from R13.70/$ previously). 

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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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