(MENAFN- Daily Forex) The South African Rand continues to trade near crucial support levels near the 16.52000 which have proven important before because of technical track record which has created reversals. Speculators may be gaining confidence in the stronger bear trend the USD/ZAR has produced the past five trading sessions and cannot be faulted for believing additional ammunition has been given to the notion of shorting the USD versus the South African Rand, because gold has put in new highs and not experienced much profit-taking.
The question speculators may have which is causing concern is what chances exist for a sudden short term reversal to ignite which will test upside? While resistance levels technically have certainly shown an ability to incrementally move lower as the trading range for the USD/ZAR consolidates, resistance has not actually faced any existential threats in recent trading. The juncture of 16.75000 appears to be the newest short term resistance level which should be practiced by speculators. Consolidated ranges often lead to breakouts in unpredictable ways and experienced traders should know these marks can be easily toppled when sudden volatility occurs.
The range of the USD/ZAR remains tight and while this can be a definite opportunity for cautious traders who do not like choppy ranges, the value band is not a guaranteed path to profit. The past month and a half demonstrate clearly the South African Rand has touched these support levels before and has experienced reversals higher while seeing the USD suddenly bought against the ZAR. This is a forex pair that has the attention of experienced speculators; because they like the USD/ZAR habit to suddenly develop breakouts.
Resistance continues to exhibit strength, betting against the short term trend of the USD/ZAR may be wrong. I admit I have a tendency not to trust short term ranges and always be cynical about direction, but the constant pressure which has been displayed against important support levels for the USD/ZAR makes it alluring as a selling position. Support appears ready to be tested. If risk sentiment in the global markets remains firm, looking for further downside momentum is not foolish.
Selling the USD/ZAR within the 16.5000 to 16.5500 levels is a speculative trade. Using a tight stop loss will protect against upward reversals, but a search for additional bearishness while the price of gold appears stable and strong is an incentive to short the USD/ZAR.
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South African Rand Short Term Outlook:
Current Resistance: 16.75000
Current Support: 16.52000
High Target: 16.85000
Low Target: 16.50000
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