Dollar/Rand Moving Into Oversold Territory

Key takeaways

– The USD/ZAR is trading within a short to medium term price consolidation

– The 20 and 50 day simple moving averages confirm the rangebound price environment over the short to medium term

– The price relative to the 200 day simple moving average, suggests that the longer term trend for the currency pair remains up

– The USD/ZAR is oversold at present

– Trend followers might look for a short term bullish price reversal to align with the longer term uptrend before looking for new long positions

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USD/ZAR – indicator analysis

The USD/ZAR has continued its short to medium term price consolidation. The price continuing to whipsaw back and forth through the 20 (red) and 50 (green)day simple moving averages (MA) confirms the current consolidatory environment.

The price is however still trading above the 200MA (blue), a suggestion that the longer term trend bias is up for the time being.

The stochastic oscillator suggests that the USD/ZAR price is moving into oversold territory at present.

USD/ZAR – Price analysis

The price action further confirms a short to medium term consolidation for the USD/ZAR. The broader levels of this rangebound environment are considered at R18.40/$ (support) and R19.65/$ (resistance) respectively.

In the short term we see the price of the currency pair drifting towards the R18.70/$ support level.

USD/ZAR – technical analysis view

Traders respecting the longer term uptrend still in place (dollar strength / rand weakness), might prefer keeping a long bias to positions.

Long entry might be considered on a bullish price reversal closer to either the R18.70/$ or R18.40/$ support levels, ideallyaccompanied by a move out of oversold territory (stochastic) as well. In this scenario a move towards initial resistance at R19.35/$ becomes the initial upside resistance target, while a close below the reversal low might be used as a stop loss consideration.

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Key news

There are a number of key data points spread throughout the new trading week which could influence direction in the USD/ZAR, a summary of which is as follows:

– US Retail and core retail sales, Tuesday 17 October at 1.30pm (GMT)

– South African CPI data, Wednesday 18 October at 9am (GMT)

– US weekly unemployment claims, 19 Octoberat 1.30pm (GMT)

– Fed Chair Jerome Powell speaks, 19 October at 5pm (GMT)