I did not update last week but the previous week was looking for a consolidation or completion of the ABCD pattern (see links below for previous evaluation). The outcome was a consolidation. So now my view is that we will se some further consolidation next week around the yearly PP and previous important structure at just above R14/USD. But the following week could see a dramatic impulse move first targeting levels around R18/USD and then possibly higher.
Seems like we are coming near the bottom of the lower trend line of the long term (2011 - current) USDZAR channel.
If the long term channel holds then it's time to go long USDZAR as soon as ZAR weakens or USD strengthens?
So many factors but this should provide us with a low risk, high reward opportunity.
SteynTrade
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Yes, the R13/$ is an important threshold. A break could mean some more Rand Strength. A the leas I would expect some bounce at this level so good for a long trade.
MarketRhapsody
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US elections November, possible US rate hike December, SA possible downgrade December... etc.
So R13ish/$ is critical level.
What will motivate you to go long USDZAR?
Would you consider short if channel, R13ish level breaks?
SteynTrade
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I don't actually trade USDZAR. I live in SA and everyone asks and I use it to gauge the state of our economy for business and other investments. If I would trade it I would trade long-term Rand strength as a carry trade but I do not see this opportunity now. Could have done a nice carry trade from the start of the year but I didn't. Nothing has fundamentally changed to all the things you mentioned and I think we have just made a correction. The current optimism is short term. The Rand is highly connected to the Gold price and I think this could improve some more so we may break 13. If we break 13 we could test 12 but I think that will be it. I was targeting the 12 level in earlier posts as the level for the end of the corrective channel. It is just taking longer than I expected.
MarketRhapsody
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Thank you for the reply! I'm also in SA :)
Yes I agree an USDZAR carry trade is the ideal with the high interest, but there is so much general unpredictable risk in SA, and sometimes it seems like the Rand strength has limitations, but the potential weakness almost unlimited.
If R13 areas hold and USD becomes bullish again I would look for a potential USDZAR long and target R14.40 area.
If the long term channel holds then it's time to go long USDZAR as soon as ZAR weakens or USD strengthens?
So many factors but this should provide us with a low risk, high reward opportunity.