S&P downgrades SA’s local currency debt to ‘junk’ status While Moody’s issues a warning. (full article www.moneyweb.co.za)

USDZAR and EURZAR Bears will look to sell because of the carry. USDZAR and EURZAR Bulls will look to buy because they forecast a continuation of Zar weakness as a result of the news and lack of confidence in the South African Government’s ability to do what is required to steer South Africa back on track as we head into the ANC conference and 2018 budget. Trading as we head into the ANC December conference is probably going to be quite sensitive to the news so tread carefully.

A weaker Dollar saw a more limited move in USDZAR when compared to EURZAR as a result of a stronger Euro. Keep an eye on the strength/ weakness of USD and Euro when trading against a strong/ weak ZAR.

Best of pips friends.

USDZAR Daily

Price came off the 38.2% fib on the 1 Nov and failed to reach the extension. Price also broke the 21 and is currently coming up off the 55 which predicts a double top. If your view is that the more than 100% retracement of after the previous high and the 55 is setting this pair up for a reversal then you are paying attention to November's MM3 for a right shoulder. If you believe that recent fundamentals will see ZAR continue to weaken then your target is the 138.2% fib extension (November's MM4) after price came up off the 50% fib. Daily stoch says up.

USDZAR H4

Price action shows price coming up off support, hitting the 55, back down to support for a double bottom and then up to role reversal resistance for a higher high. Bulls would see this as a 123 reversal pattern. Aggressive Bulls would be looking at buying the dip in the fib zone, highlighted in green and then trading higher lows as we head up to the 138.2% fib extension while keeping an eye on new weekly pivot points and Bullish targets. Each higher high and higher low drawn has been projected using fib retracements and extensions. It is possible that price does not pullback and that we open with a gap higher. That would still make the role reversal support at last week's WPP support so if you are a Bull trade accordingly. If you are a Bear then price is currently at resistance and you would be setting up for a sell at market or at MM3 for the right shoulder as indicated on the Daily chart.

EURZAR Daily

Similar to USDZAR, if you see the 100% retracement after the previous high and price coming up off the 55 as an indication of a slow down in trend and indication of a reversal then you are paying attention to price at market and setting up a short. If you are a Bull and you see the weakness in ZAR continuing then your target is the 138.2% fib extension while keeping an eye on new weekly pivot points and Bullish targets. Daily stoch says up.

EURZAR H4

I have drawn a fib of that higher high and highlighted the fib zone in green. Bulls are watching November's MM3/ 38.2% fib retracement level and paying attention to new weekly pivot points for confluence with support zones with a target of the 161.8% fib extension which is at about the same price as the 138.2% fib extension drawn on the Daily chart. Bears are paying attention to current resistance and setting up a sell. Note that if price gaps higher at market open, current resistance becomes future support and Bulls would trade this accordingly.

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