Yes, 11-12 without any market shocks, but that will not be the reality. Why not? Because the asset bubbles in global in markets, created by the biggest monetary experiment in history, are on the brink of collapsing. So, from a global macro perspective, not if, but when inflation rises and the Fed hints in the direction of tapering, the bust will happen. Investors will rush to the dollar and gold as safe havens. However, final melt-up expected in fin markets in next few months to reach the top. The dollar will likely decline again after this event, but not before a huge spike in USD. This, together SA domestic risks, will devaluate the rand quickly to the R17 plus handle. Technically, the Rand can still fall to R13.50/USD and the dollar index to around 85 in the short term, but dollar weakness can only benefit short sellers so far. Domestic risks will also come into play shortly.
Nasdaq_Diaries
⋅
@juhanekom, Great perspective on the fundamentals, I appreciate the view. As mentioned I will be taking orders in this market for the better sense of how the monthly closes and approach it technically as the fundamental side of it s very side ways on both ends. When it comes to emerging markets I usually look for swing or position trading opportunities to avoid all the choppy price action that happens on lower time frames. This is will be interesting lets see if we get the R17 push or the 11-12 pull. Namaste
juhanekom
⋅
@Nasdaq_Diaries, Thank you for your reply. Still too much liquidity in the market currently, so I expect a final parabolic run in the financial markets next few months before the crash happens. This will be the final stage of the current bull run that lasted more than a decade. It will suck in FOMO investors and be the biggest bull trap in history. Unless domestic risks act as a counter, your scenario might become a reality in the short term with further weakening of the dollar, but the USD/ZAR has been in a bear market for just over a year now and tend to turn around when nobody expects it. The Rand is overbought weekly and monthly technically, so I would be very careful to short USD/ZAR at current levels. It already declined down from R19.30 to R13.95 in the last year. I still believe my macro view will play out in the next 6-12 months, but in the short term the current trend may very well continue....
Nasdaq_Diaries
⋅
@juhanekom, I like the way you think, I appreciate you sharing your insight on this idea, your view is quite interesting and would be a great risk reward setup if it were to occur rather than shorting at this low curve.
Namaste 🙏
NickBM88
⋅
I guess this implies a weaker dollar for the rest of the year (or at least the coming months).
This would suggest that Powell and the Fed won't raise rates and inflation will continue, as investors flock from the USD. (I am trying to understand on a macro level why this fall might happen).
From my long-term trend line, support actually loos like ~13.60- 13. 80 range. So, there is still some wiggle room for a weaker dollar without breaking this long term support. Also, remember the USDZAR is incredibly 'wicky' so, I wouldn't be surprised if it pushes all the way below this trendline then reverses and comes all the way back up.
The USD might be in the toilet but the ZAR isn't exactly standing on solid ground at the moment, either...
USD has plenty of uncertainties on its monetary policies which of cause the talks being on its inflation status and objectives. FED has not yet shown any signs of certainty with rate hikes. Technically you are we are on a multi annual support of the upward trend line. But if you view this trend it last spiked high above the R19 to the $ range with plenty of demand to the $ then which caused heavy imbalance. The previous demand breakout of monthly was never tested and I speculate that it will in the coming months.
I will wait on the monthly close to zoom in on lower time frames to trade this market according.
As you said its a choppy market so plenty chances of fake breakouts but I also posted the DXY idea for a bearish monthly move to come, so that to some extent could help this ZAR idea even though the correlation is weaker than that of other USD pairs.
Thank you for taking the time to review my idea.
Namaste
GustavFourie96
⋅
I'm also quite bullish on the rand, but Ramaphoria peak rand rates seem a bit far at the moment. SA's terms of trade, rising commodity prices, carry trade appeal and an accommodative Fed are definitely the main rand drivers. SA's fiscal deficits and lack of policy reforms has me a bit tentative.
I have a similar long-term view. We have reached my green target range and a break below this range will see us drop to 13.18
Nasdaq_Diaries
⋅
@GustavFourie96, Yes I see your point of view you mentioned appreciation in commodity pricing that in a sense would be causality of the depreciation of the dollar from its risk off environment. My speculation is bearish on the high risk asset the USD and bullish on safe haven assets like the Gold, the ZAR will benefit in between fundamentally even if its not the cleanest with its own policies. Although stocks are on a risk on state which might or might not hold short term.Namaste