Although there are both fundamental and technical reasons one might need to shop for USD/ZAR, do your own research.
After failing to squeeze silver shorts, participants on a well-liked website forum are discussing shorting the South African Rand as their next target for a brief squeeze. However, the author also notes that “this isn’t a short-term swing trade”. this might be correct from both a fundamental and/or a technical standpoint, but it might be difficult for a web forum to require on the South African Federal Reserve Bank (SARB), ala George Soros vs the Bank of England. However, the SARB has been worried about the direction of the economy after cutting 300bps in 2020. additionally , the South African variant of the coronavirus making its way round the world, B 1351, is claimed to be more contagious than the first virus. additionally , vaccines could also be less effective on the South African strain. THESE could also be reasons to short the Rand.
On a daily timeframe, USD/ZAR has been moving lower since fixing pandemic highs on April 6th, 2020, forming a descending wedge. Price has pulled back to pre-pandemic support, and briefly spiked to a replacement low today at 14.7079. additionally , the RSI has made 3 higher lows as price has put in 3 lower lows. Price is currently trading mid-range within the wedge between 13.92 and 15.50.
Rumors circulating that the Rand could also be subsequent short opportunity did help lift USD/ZAR off the support area (on the daily timeframe). However, on a shorter 240-minute time-frame , the pair had moved below a descending wedge of its own, only to maneuver back to the wedge and test the upper downward sloping trendline near 14.6877. The target for a descending wedge may be a 100% retracement of the move. If price does break though the upper trendline of the wedge, it must first get through horizontal resistance at 14.7754, the 38.2% Fibonacci retracement of the January 11th highs to today’s lows near 14.8822, then the five hundred retracement of an equivalent timeframe near 15.03 (the top trendline of the wedge on the daily timeframe also crosses near this level).First support below todays lows of 14.3980 is from January 2020 near 14.2729, then rock bottom trendline on the daily timeframe near 13.9500
USD/ZAR has been during a downtrend since the March pandemic highs. Although there are both fundamental and technical reasons one might need to shop for the currency pair, do your own research. Don’t just follow an internet site forum. thanks to the leverage traders get within the fx markets, if a trade goes against someone, that person can get administered very quickly. Use stops and exercise good risk management.