US Dollar/SA Rand Begins to Break Higher
06 March 2009
After a significant peak last October, a pullback in USD/ZAR was followed by a lengthy period of consolidation. For some time we have felt more favourable towards the bulls and, this week, we have finally seen a bull break. Will it last?
MONTHLY CHART: See how the long term 76.4% retracement here was very effective in repelling the 2008 surge. It remains an important hurdle to cross.
DAILY CHART: For some time now we had been watching price action within a bear channel we had drawn in. After support was found from the 9.5000 area (close to a small 76.4% level) there has recently been an initial close above the projected channel top. This triggered us bullish. We first target the nearby 10.7700/8300 area (21-Nov high/61.8%). Resistance would not be a surprise here, but later strength should be there to test the higher 11.2200 76.4% area. Ideally s/term pullbacks will find support at/above the 9.7755 26-Feb low now, in order to preserve momentum. In this week’s FX Trading Guide we suggested that any buyers on dips will likely have initial stops below that 9.7755 low, targeting towards 10.7700/8300 area for partial profits.
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