USDZAR Short

The SARB is expected to cut rates from 6.75% to 6.50% which could be good for the South African economy, investors will be able to lend at a cheaper rate but there are a lot of fundamentals tied to the ZAR with the Moodys rating and politics in South Africa being watched closely by market participants. When taking all this information into account we need to also consider whats happening with the U.S dollar. Weaker dollar will allow for ZAR to strengthen allowing the USDZAR to fall.

USDZAR H1

USDZAR has been ranging between 11.76 and 12.02 for the past 3 weeks and recently broke support of the range which allows Bears to setup up a breakout and pullback opportunity around 11.77 which is also a role reversal. This trade plan is only taking into account technical analysis.

2 thoughts on “USDZAR Technical Analysis. South African Reserve Bank expected to cut rates this afternoon”

  1. Ayman A says:

    Hey Giveness, Nice setup I like how you paired the Role reversal with the trend line. Now my fundamentals are shaky and Im still learning, but the SARB cutting rates should be bearish right?. Unless you think the market will perceive this as the beginning of an economic recovery, I doubt that is the case if they are just starting to cut rates as maybe more rate cuts will be needed to jump start the economy. So I would view these rate cuts not as the beginning of a recovery but the beginning of a recovery attempt. On the dollar side the USD is kind of sideways , but in regards to the euro(what Im basing this off) it has upside pressure on long term resistance. I would expect it to take a while to break through, probably another month. So I wouldn’t bank on USD weakness for this trade

    Technically Speaking I think the set up is nice, but I would expect this pair to have a bigger pull back on a larger time frame. Im thinking it will pull back to about 12.75ish to 13. To me it looks like its bottoming out on a daily chart. Also, its been a month now and it hasn’t been able to get past the monthly m2 which suggests to me profit take and bulls are starting to take over.

    I like the setup, I think you get a free shot regardless plus you have trend on your side. Good luck, thanks for the post.

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