The South African Rand Starting to Reverse Course

ZAR in Focus – Technical View

After an extended period of rand strength, the following charts highlight what could be the early stages of a larger trend reversal starting to emerge against developed market currency peers, the USD, GBP and EUR

USD/ZAR

After the four month price consolidation between levels R11.50/USD and R12.20/USD (highlighted blue), the USD/ZAR looks to have completed an upside breakout from this range. The breakout is suggestive of a renewed uptrend in the short to medium term. The bullish breakout is supported by a bullish crossover of the 20 and 50 day simple moving averages which also suggest a renewed uptrend in the short to medium term. From a trading perspective, R12.55/USD becomes the initial resistance target, a break of which further favours R12.85/USD as the next upside resistance target. Should the price of the currency pair instead move to close below R11.90/USD, the bullish indications would be deemed to have failed.

GBP/ZAR

The price activity of the GBP/ZAR currency pair, suggests a breakout from an inverse head and shoulders reversal pattern (labelled L, H and R). The pattern suggests a change in directional trend from down to up, and in turn GBP Strength, Rand weakness. The price reversal is also supported by a bullish crossover of the 20 (green line) and 50 day (red line) simple moving averages. With these technical indications in mind, a move to towards resistance at R17.70/GBP is favoured, while should the price instead move to close below R16.80/GBP, the aforementioned bullish indications would be deemed to have failed.

EUR/ZAR

The price activity of the EUR/ZAR currency pair, suggests a breakout from an inverse head and shoulders reversal pattern (labelled L, H and R). The pattern suggests a change in directional trend from down to up, and in turn GBP Strength, Rand weakness. The price reversal is also supported by a bullish crossover of the 20 (green line) and 50 day (red line) simple moving averages. With these technical indications in mind, a move to towards resistance at R15.65/EUR is favoured, while should the price instead move to close below R14.70/EUR, the aforementioned bullish indications would be deemed to have failed.