Trade FX: USD/ZAR with Unum Capital.
To get started, e-mail lester@unum.co.za
Overall Trend:
Long Term: Consolidating Within an Upward Trend. The 8-EMA Has Been Breached, Use The 21-EMA (Weekly) As a Potential Buy Range.
Short-Term Trends:
7-Day Trend: Weak
14-Day Trend: Weak Within A Sideways Consolidation Rangebound
Short-Term Trading Opportunities: No explicit short-term buy/long position opportunities are mentioned. The focus is on the long-term trend and using moving averages for potential buy ranges.
Medium-Term Outlook (2 to 4 weeks): No reading available.
Long-Term Outlook (5 to 8 weeks): Consolidating Within an Upward Trend. The 8-EMA Has Been Breached, Use The 21-EMA As a Potential Buy Range.
In Summary: The USD/ZAR pair is currently in a long-term uptrend with recent consolidation. While the short-term trends are weak, the long-term outlook suggests a potential buy opportunity using the 21-EMA (weekly) as a reference point.
Previous Post (19 January): USD/ZAR Bearish Reversal In Line With Model Reading (R19.21 to R18.63)
Last week, before trading commenced in Asia, our key view around the Rand was that the USDZAR pair was approaching short term overbought conditions and that any failure to hold the range highs could result in a bearish reversal from the overbought regime. On Monday, the pair traded above the previous session (Friday) highs before developing a long upper tail which signaled an exhaustion of the bullish momentum. From above R19.21, the pair reached a low of R18.63 before midday on Friday, breaching it's 8-day EMA but remaining above it's rising 21-day EMA.
In case you may have missed the previous note, please scroll down.
Previous Post: Before You Trade USD/ZAR, Read This (12 January)
What is the overall trend for USD/ZAR? The overall trend for USD/ZAR is bullish across all timeframes.
What is the short-term (1 to 10 days) price action reading? The short-term price action is very strong and bullish. Buyers are in control, but it's advised not to chase the price. If the price fails to hold the highs, the 8-EMA could be a short-sell target.
What is the medium-term (2 to 4 weeks) price action reading? The medium-term price action is also very strong and bullish. Buyers are in control, but again, it's advised not to chase the price. If the price fails to hold the highs, the 8-EMA could be a short-sell target.
What is the long-term (5 to 8 weeks) price action reading? The long-term price action is showing aggressive buying underway. However, it's advised not to chase the price. Look for an opportunity to short-sell back to the 8-EMA if the price fails to hold prior session range highs.
In summary, the USD/ZAR is in a strong uptrend across all timeframes. Traders should be cautious and avoid chasing the price. Short-selling opportunities may arise if the price fails to hold key levels or becomes extended vs key moving averages.
Points To Ponder:
The pair is trading at an extended level above it's 75-day exponential moving average. Although extended, it is not extreme compared to historical distance readings.
The pair is above a rising 8-day EMA.
The pair is above a rising 21-day EMA.
The 75-day EMA has turned upward.
The 21-week EMA has turned upward.
The 50-week EMA has started to turn upward.
The 200-day SMA is trading sideways.
Regime for each time frame
Daily time frame = High bullish momentum/Approaching overbought
Weekly time frame = Overbought
Monthly time frame = Strong
Lester Davids
Analyst: Unum Capital
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