The rand report

The USD/ZAR upward trend looks to have reversed.

In our last report we:

  • Viewed the reversal off support at R13.95/$, supported by the stochastic crossing its trigger line in oversold territory as a long opportunity
  • Upside targets considered were located at R14.45/$ and R14.57/$ respectively as initial targets
  • A close below R13.80 was used as the failure level (stop loss)

Since the last updated call, we can see circled blue, that the USD/ZAR reversed course and triggered our stop loss at R13.80. The decision by Moody’s to extend South Africa a lifeline and not follow ratings agency peers in dropping South Africa’s local and foreign currency debt to sub-investment grade (yet) has provided the short term catalyst for rand strength (for more info read S&P Global downgrades SA, Moody’s gives lifeline).

As it stands currently, the USD/ZAR has reversed off resistance (previous support) at R13.80/$. R13.25 is the next downside target favoured, a break of which (with a close) would consider R12.75 as the next downside target. For renewed faith in the near term uptrend (and failure of the near term downtrend) we would need a close above R13.80/$ once again. Traders looking for new short term entries might consider such from reversals off (around) the downward (dotted black) trend line. 

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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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