When in doubt zoom out
Updated
The volatility of the rand is forcing us to “when in doubt zoom out.” Last week the rand managed to pull the pair to a low of 18.47 but the blue support range held its ground. The two critical rates to watch now is the 200-day MA support at 18.78 and the 61.8% Fibo resistance rate of 18.87. A break above 18.87 will allow the pair to test levels above the blue downward trend line and move into the red resistance range between 19.16 and 19.28. A break below 18.78 will however allow the rand to re-test the support range around the 18.50 mark. The rand is currently at the whims of global investor sentiment around SA’s new government of national unity but as the dust settles SA will be able to attract investors back into the SA bond market which is rand positive. The recent performance of the SA economy and the cooling of global commodity prices are however rand negative. Range bound movement between 19.00 and 18.70 can be expected as the pair looks likely to fall into a corrective pattern. A break below 18.50 will however invalidate the expected 5-wave impulse in the chart.
Note
Idea has been invalidated.
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