The next couple of months will be very important, but it’s worth noting that we are in an uptrend, and it certainly looks as if we are trying to break above a double top and go much higher.
- The USD/ZAR currency pair pulled back a bit during the course of the trading session on Tuesday, as we continue to see a lot of volatility in emerging markets.
- The South African Rand of course is a very heavily influenced currency from the commodity markets, and therefore you would have to pay close attention to how commodities are doing.
- Furthermore, it’s also considered to be a proxy for African growth in general, so it’s an emerging marketplace through and through.
The 50-Day EMA sits right around the 18 Rand level, an area that would cause quite a bit of psychological importance. Any pullback at this point in time would more likely than not end up being a bit of a support level, but if we were to break down below there, then the 17.75 Rand level would be the next support level. On the other hand, if we turn around and go higher, it’s likely that we could go reaching toward the 18.75 Rand level. Anything above there opens up a much bigger move, as the US dollar would more likely than not take off to reach the 20 Rand level.
Regardless, I think at the very least we are looking at consolidation to say the least, but at this point in time this is going to come down to risk appetite in general. The US dollar has been noisy to say the least, so therefore I’m not surprised at all to see that we have pulled back, only to turn around and gain half of those losses back. Furthermore, interest rates come into the picture, as we continue to see the argument as to whether or not the Federal Reserve is going to stay tight, or if they are going to start loosening rather soon. Ultimately, the Federal Reserve has suggested that they are nowhere near doing that, but Wall Street of course is looking for cheap and easy money, so therefore they are trying to convince themselves that they are going to get it.
The next couple of months will be very important, but it’s worth noting that we are in an uptrend, and it certainly looks as if we are trying to break above a double top and go much higher. That being said, if we were to break down below the 17.75 level, then the market could go down to the 200-Day EMA.
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