(MENAFN- Daily Forex) Short term correlations with gold and the USD/ZAR can be disastrous sometimes, a dynamic bullish trend has erupted in the forex pair which has left many speculators chasing bearish momentum feeling beaten up. Support levels of 16.40000 to 16.50000 in the middle of July have proven to be a key reversal point once again for the USD/ZAR. This same juncture saw similar price action occur in June and perhaps history should serve as a lesson here. However, if this two-month technical track record is correct, it could mean that buyers of the USD/ZAR may not be able to sustain their pace much longer.
Resistance levels of 17.80000 to 17.90000 must be watched closely. The last time these values were sincerely tested was in late May. Speculators who have been shorting the USD/ZAR with the mindset the record territory of gold will sustain selling of the forex pair have been delivered tough trading results the past week. After showing some signs of a possible re-emerging bearish trend the 17.20000 support level held last week and has produced solid buying of the USD/ZAR.
So while gold flirts with record highs there have been painful results for traders who believed the US Dollar would be sold wildly against the South African Rand. However, this was not a realistic outlook, to begin with taking into consideration the scale of economic challenges facing South Africa and its rather problematic lack of government transparency on occasion. Risk management is always essential while trading.
Perhaps the 16.5000 level which has been tested twice in the past two months has served as a support level that activates strong reversals. Interestingly, the buying of the USD/ZAR has taken place in a rather tranquil manner the past couple of weeks, which means that resistance levels above still may be tested and more buying of the USD/ZAR has to take place before another bearish trend can emerge.
Short term traders need to be careful. The South African Rand has challenged traders who have pursued selling of the USD/ZAR based on the current values of gold short term. Yes, the USD/ZAR does look like it has reached important resistance levels, but there may be some buying momentum in this forex pair that remains, before a reversal lower can begin in earnest again. Patience will be a key for speculators who believe selling will develop; the use of limit orders to sell the USD/ZAR around the 17.80000 juncture with stop-loss orders near 17.95000 might be the recipe to test this forex pair today.
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South African Rand Short Term Outlook:
Current Resistance: 17.88000
Current Support: 17.50000
High Target: 18.04000
Low Target: 17.20000
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