USD/ZAR Currency Pair

By Technical Analyst Colin Abrams

Recommendation: ENTER IN BREAKOUT DIRECTION

Current Trend: Short-term sideways. Med-term sideways. Long-term rand strength.

Strategy: Sell short rand a close above 13.11 (line 6)/Go long rands a close below line 5 (12.85).   

(Daily)

Chart Setup: The rand is very range bound in the immediate short-term between lines 5 and 6 (12.85 and 13.10, respectively). It can break out in either direction, and is testing line 6 right now.

• Med-term its chart is forming a large symmetrical triangle (lines 1 and 2).
• Its short-term Stochastic can still continue higher in the short-term (rand weakness).

Strategy Details: Sell short the rand on a close above line 6 (i.e. above 13.11) or, go long a close below line 5 (12.85) – whichever happens first. The break towards rand weakness looks more likely.

Target: For a breakout above 13.11 it’s to 13.33, with potential to line 2 at 13.54. But for a breakdown below line 5, it’s to 12.63. There is a dollar support zone at line/s 4 (12.62-12.54). From these levels we’ll need to re-asses.

Stop-loss: For a breakout above 13.11, stop is a close below 12.85. Once it gets to 13.24 raise stop to a breaking of its prior two-day low. For a breakdown below 12.85, stop is a close above 13.10. From 12.68 lower stop to a breaking of its prior one-day high. 

Wishing you profitable trading until next time.

Colin Abrams