The USDZAR has bounced up aggressively after the major blue support range held its ground at 18.40. The pair climbed a full rand to 19.40 within two weeks after touching the 3-month low of 18.40.
The red resistance range has however managed to come to the rand’s rescue which has allowed the pair to slide back below the downward blue trend line. The blue wedge I have been highlighting is narrowing and it is only a matter of time before we see a breakout.
The critical rate to watch remains at 18.97. A failed break below 18.97 will be the first indication of a top side break of the wedge which will see the rand fold to 19.65 against the dollar. A break below 18.97 will however allow the rand to re-test the bottom end of the wedge around the 200-day MA mark at 18.75. I’m currently leaning towards a top side break out of the blue wedge given the rand’s subdued gains from the recent rise in precious metal prices, the lead up to the local elections (29 May) and the broad-based dollar strength.
A break below 18.97 and the 50-day MA at 18.89 will however force me to reassess.
The red resistance range has however managed to come to the rand’s rescue which has allowed the pair to slide back below the downward blue trend line. The blue wedge I have been highlighting is narrowing and it is only a matter of time before we see a breakout.
The critical rate to watch remains at 18.97. A failed break below 18.97 will be the first indication of a top side break of the wedge which will see the rand fold to 19.65 against the dollar. A break below 18.97 will however allow the rand to re-test the bottom end of the wedge around the 200-day MA mark at 18.75. I’m currently leaning towards a top side break out of the blue wedge given the rand’s subdued gains from the recent rise in precious metal prices, the lead up to the local elections (29 May) and the broad-based dollar strength.
A break below 18.97 and the 50-day MA at 18.89 will however force me to reassess.
Comment:
200-day MA at 18.78 is being tested. The Pair is now heavily oversold in the 1H and 4H timeframes and the stronger than expected US PCE figure, released this afternoon, is dollar positive.
A deeper pullback onto the 200-day MA at 18.78 is however not off the cards. I'm expecting strong support between the 50 and 200-day MA's