- The US dollar has gone back and forth during the trading session on Wednesday, as we continue to threaten a major support level against the South African Rand.
- The 17.65 ZAR level is a level that has been important a couple of different times, and at this point in time, the “swing low” is one that a lot of people will be paying close attention to.
Technical Analysis
The technical analysis for this pair is potentially bullish, after selling off quite drastically. At this point, we will have to be very cautious about putting a position on, but as long as we can stay above the 17.65 level, it is possible that we could end up forming a bit of a “double bottom.” Breaking above the 17.95 ZAR level will more likely than not have me buying this pair, perhaps aiming toward the 18.15 level, just above the 50 Day EMA, and basically where the latest swing high ended up.
On the other hand, if we were to break down below the 17.65 level, then the market could go looking to the 17.40 level, but I also recognize that it would take quite a bit of conviction to break through this support level. I think at that point in time, you would probably have a lot of anti-US dollar behavior across the Forex world, and this would more or less not necessarily have anything to do with the South African Rand, but perhaps a weakening US dollar in general.
That has been the case as of late, and with the political situation in South Africa becoming a little bit untenable for the US, it’s possible that we could see the South African Rand itself have a lot of problems. However, the Forex world typically moves on the whims of the US dollar more than anything else, and therefore “If you get the US dollar right, you typically get the Forex markets right.”
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Christopher Lewis has been trading Forex and has over 20 years experience in financial markets. Chris has been a regular contributor to Daily Forex since the early days of the site. He writes about Forex for several online publications, including FX Empire, Investing.com, and his own site, aptly named The Trader Guy. Chris favours technical analysis methods to identify his trades and likes to trade equity indices and commodities as well as Forex. He favours a longer-term trading style, and his trades often last for days or weeks.
