Last month (May 16th) the USDZAR trade hit Target 1 (15.5380) from our entry at 15.2322 before turning at 15.9742, less than 3 pips from Target 2 (16.0000).
On Friday S&P Global ratings affirmed South Africa’s investment-grade credit status, that, together with the poor US Non-farm payroll jobs report helped the USDZAR to one month lows on Monday. This also coincided with a break of the 50 DMA and the key psychological 15.0000 level, from a technical perspective this has been positive for the rand and negative for the USDZAR pair.
The next key level is the 200 DMA at 14.8540, which has held for two days. A breach and break of this long term support area could take the pair to 14.2340 (2016 low) and further down to 13.9020. A break above 15.5000 would be required for long positions to be considered.
Trading the exotic pairs brings some additional risks and rewards. The lower liquidity and higher spreads means that trades should be carefully constructed and evaluated before executing. As we always emphasize your trading capital is your most important asset and you should always trade with strict risk management rules. “Trade what you see not what you think”, apply your rules consistently and you can be successful regardless of the asset or time frame you choose to trade.
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