The rand had a tough week at the office last week which saw the local unit depreciate roughly 2.37% against the dollar. Risk-on sentiment gained some enthusiasm following Powell’s speech on Tuesday which hit the right notes regarding the Fed’s self-proclaimed victory over inflation. The sentiment however soured after US CPI numbers for the month of December were revised higher later in the week. The combination of negative local factors and the dampened risk-on sentiment saw the pair break past the critical resistance rate of 17.83 (blue 61.8% Fibo retracement rate) to touch the November 2022 high of 17.95. Tuesday’s US CPI results for January most definitely has market moving potential which could put the rand back on the ropes but there is potential for the rand to attempt to get the pair back below the critical rate of 17.83.
The bearish divergence on the 4h RSI and the rising wedge formation is signalling a move lower towards the neckline of the upward channel and the 23.6% Fibo retracement rate at 17.70. I’m planning to drop some sell-limit orders above 17.85 with a take profit area between 17.60 (blue 50% Fibo retracement rate) and 17.70.
There is every possibility that the rand could pull the pair as low as the critical support at 17.50 (orange 23.6% Fibo retracement rate as mentioned in previous ideas) depending on how markets digest the latest US CPI results on Tuesday, but I don’t see the rand maintaining rates below 18.00 for too long given the current macro backdrop. A failed break below 17.50 could see the pair climb back to the 2022 highs in the 18.50’s.
(I'll post a longer-term daily and weekly timeframe idea during the week. I'm bearish on the rand over the longer-term)
The bearish divergence on the 4h RSI and the rising wedge formation is signalling a move lower towards the neckline of the upward channel and the 23.6% Fibo retracement rate at 17.70. I’m planning to drop some sell-limit orders above 17.85 with a take profit area between 17.60 (blue 50% Fibo retracement rate) and 17.70.
There is every possibility that the rand could pull the pair as low as the critical support at 17.50 (orange 23.6% Fibo retracement rate as mentioned in previous ideas) depending on how markets digest the latest US CPI results on Tuesday, but I don’t see the rand maintaining rates below 18.00 for too long given the current macro backdrop. A failed break below 17.50 could see the pair climb back to the 2022 highs in the 18.50’s.
(I'll post a longer-term daily and weekly timeframe idea during the week. I'm bearish on the rand over the longer-term)
