USDZAR Long Possibility - Can the Rand Withstand the Pressures?First let me preface this by saying I am always a student of the markets. My analysis is an educational study and is for demonstration and study purposes only. We must study the market closely and understand that market conditions are subject to change. Thus, I say, as always, perform your own analysis and trade at your own risk. Always use proper risk management. This idea does not constitute a signal.
Fundamentally, we have many things to consider and more uncertainties to come which has caused the rand to weaken. South Africa has many fears relating to both pre and post-election which continue to linger, including maladministration and corruption; unemployment, housing, and energy concerns. To top it off Moody's issued a strong warning last week that the country was fast slipping into junk status as continuing structural weaknesses and rising debt overran South Africa’s ability to service its obligations. This week we can expect some key economic data to be released related to CPI and the South African Reserve Bank policy review. We won't know this data until it is released later this week, which also plays a part in rand performance. These events will likely cause some slight volatility of the rand. On the bright side, the nation stands hopeful and looks to Ramphosa and his administration to turn things around for the better.
Now for the technicals, please refer to my last trade idea (see link below), where we hit take profit after a double bottom and bull run. I am hopeful to see a slight pullback to the area noted and possibly a break to the next area of resistance in the short term. My analysis is based on a few confluences such as fib retracements, fib extenstions, and we also see price is currently sitting above the 200 MA, which is shows us that there are still buyers in the market. We see price being contained so far within an ascending channel as noted as well. After a brief retracement, I hope to see a bounce off a key level in the market, with the 200 MA still being a form of dynamic support, to take us to the next high.
Again, and as always, trade at your own risk. This idea is for demonstration and educational purposes.
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