USD looking oversold against the ZAR

At current levels the USD/ZAR is starting to look oversold suggesting that a short term rebound on the currency pair may be nearing.

The USD/ZAR has traded back to support of the trading range which has been in place since August 2015. Strength in the Rand has gained traction since South Africa managed to avert a ratings downgrade in December 2016. Dollar weakness has furthered the cause for the rand, most significantly since the inauguration of new U.S. president, Donald Trump and his policy rhetoric’s which have followed.

However at current levels the USD/ZAR is starting to look oversold suggesting that a short term rebound on the currency pair may be nearing (i.e. Dollar strength / Rand weakness). The oversold signal at current support is considered short term bullish indication for the USD/ZAR pair and a move back to R14.05/$ is considered. Aggressive traders might consider the current pricing a long entry opportunity, targeting a move back to R13.40/$ and R14.05/$ respectively, using a close below R13.00/$ as a failure level. More conservative range traders might wait for a bullish price reversal to confirm with a close above R13.40 signalling the long entry opportunity. In this scenario a close below R13.20/$ or R13.00/$ might be used depending on the traders risk threshold. 

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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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