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USD/ZAR Forex Technical Analysis

Daily Analysis – USDZAR

With the news of Zuma’s Free Education Plan and the effect it will have on the economy, South Africa takes another deep breath and waits for the outcome.
Let’s face it South Africa has no shortage of fundamental events: Gigaba’s Medium Term Budget Policy Statement, WMC, State Capture, Junk Status, the list goes on and on.
In my post today, I ask whether it is possible to ignore all of the fundamental noise, that I’m sure we are all so tired of, and analyze the Rand based on pure technical analysis.

Stephen Bigalow of theĀ candlestick forumĀ always states that technical analysis and candlestick patterns are the graphical representation of fundamentals.

So looking at the USD/ZAR charts.

Despite all of the Fundamental noise, the chart below shows that the pair is still respecting the technical indicators such as the major support and resistance zone and is showing a very similar cyclical pattern to this time last year.

Moving onto current analysis.

At the time of writing this article, Tuesday’s candle posted a nice Bearish engulfing pattern.
This got me rather excited as it was aligned with other confluences that I look out for when trading forex.
Firstly, a Bollinger breakout paired with an engulfing or tweezer candle pattern and an engulfing pattern at a support or resistance zone.

Monday’s candle broke out above the upper Bollinger band and retracted and, in conjunction with Tuesday’s candle, has formed a tweezer top.
Should the Bearish engulfing pattern hold, we could see the pair revert back to its mean at 14,151.
A break below 14,151 and the pair could go back down to the 14 level.

Getting back to the 14 level is going to be difficult as there is a major support zone at 14,200 blocking the way.
The 50 Day Moving average is above the 200 Day Moving average, indicating a bullish trend and the MACD is also showing some bullish tendencies.
Failure to break below the 14,2 support area and the pair could bounce back to 14,6 and 14,8 in extension.

Stanton Roux

Stanton Roux

Algotrading.co.za is a free online learning platform that merges my two passions software and trading. I like to bring a new twist to trading and show how software can improve your trading skills.