Through out my scanning I found that GBP/ZAR has been trending very well to the upside since 2011, moving from 10.77 to almost 20. Which is a very nice compounding opportunity. For that, we want to catch an opportunity to ride the continuing uptrend.
This pair has been in consolidation since 2014 as prices have been capped in between the resistance of 18.80 and support of the round number 17.03.
We waited for a break out to either the upside or the downside, and it finally did. Now we can see that prices breached the strong resistance that was met 4 consecutive times for prices to form a new resistance at the price of 19.60 almost hitting the 20 round number.
The pattern shown in the chart is a normal consolidation phase that comes after a long trending period after completing a five wave cycle. Now prices are trading above the 200 Day moving average, suggesting further upside momentum and a formation of a new cycle.
Where do we enter?
We want a confirmation that this breakout is valid and its not a false one, that might catch us in loses. For that we are expecting prices to find some re-testing. In other words we expect prices to fall again to re-test the support of 18.7907 (red dotted line) that was previous strong resistance. Price however, might fall further to the green dotted line at the 18.0116 round number which is the 61% fib level. Looking at previous price action of this pair, prices found support at the 61% fib level before it could continue moving in the direction of the trend.
So I suggest entering half of the position in the red dotted line zone, and the other half in the green dotted line zone, and wait for prices to reach the 20 round number and take profit 1 and continue towards the 22 round number.
I hope this strategy has helped you. Its important to trade without hassle and avoid day trading. Trading simply without many technical indicators makes it easier for us to see where prices are going.
Fundamentally the US dollar is expected to continue rising in the future. We will keep track of U.S. fundamentals and economic data, in order to forecast the probability of the fed rising interest rates in September. Rising rates in 2015 is a goal Janet Yellen is looking for, and it would surge the US dollar to new levels.