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4h USDZAR updateYesterday’s pullback was a bit deeper than expected following the US initial jobless claims result. The US jobless claims came in higher than expected and coupled with the lower-than-expected US CPI results from earlier this week, markets are betting on a Fed rate pause sooner than initially anticipated. My record of trying to predict the Fed has been poor so I’ll just stick to my technical and fundamental analysis. The rand managed to pull the pair onto the 61.8% fibo retracement rate at 18.01 following the jobless data from the US which was the second wave of the next 5-wave impulse. I expect the third wave to push the pair towards the resistance rate of 18.72 (the current yearly high). A break below 18.01 will however invalidate this expected move and the 5-wave impulse. The next resistance rates to keep an eye are 18.11, 18.21 and 18.33. A break above 18.33 will confirm the move to 18.71. Technically on the 4h, the RSI bounced off the oversold zone and the MACD is rolling over and a cross-over buy signal seems imminent. The daily MACD is still holding a buy signal, all of which is rand negative. Additionally, the DXY is heavily oversold and a bounce in the broad-based dollar strength could create headwinds for the ZAR.
Long
by Goose96
2
USDZAR next 5-waveThe USDZAR pair completed an ABC corrective wave at the end of March after the higher-than-expected 50bps rate hike from the SARB allowed the rand to pull the pair into the support range between the 50%- and 38.2% Fibo retracement rates at 17.68 and 17.92, respectively. Since the start of April, the dollar (DXY) has found some support in the range between 101.36 and 101.81 and as a result, has the rand on the ropes heading into the 2Q2023. The aggressive bounce out of the blue support range is indicative of a first impulse wave and I suspect this next 5-wave impulse will see the pair complete the 5th wave of its major cycle which will push the pair onto its 2020 peak at 19.35. (Please see attached my previous idea for the 1H2023 for a wider view) Technically there is a buy signal on the MACD indicator which is rand negative, and the daily RSI has room to move higher before hitting overbought zones.
Long
by Goose96
USD/ZAR pre-SARB rate decision.The SARB will release their latest interest rate decision on Thursday and expectations are pointing to another 25bps hike which will push the repo rate to 7.50%. I haven’t posted an idea on the pair in quite a while but a whole lot has happened since my last idea. March has been a very turbulent month for the local unit, but the rand is holding up relatively well in the month of March given the recent fragilities in the US banking sector. As things stand the rand has depreciated just over 1% against the dollar this month. The rand however slid to a three year low of 18.71 earlier this month but it did manage to pull the pair to a monthly low of 18.01 on the back of a broad-based weaker dollar. Currently it seems as if the pair has completed an abc corrective pattern following the 5-wave impulse which saw the pair climb from the yearly low 16.70 to 18.71 earlier this year. In the beginning of the year, I predicted that the pair would hit the 2020 high of 19.36 in the 1H2023 (I tagged the idea in this post). I’m not prepared to stick my neck out just yet to confirm my previous idea haha however a break above the yearly high of 18.71 could confirm the move as it will signal another impulse move higher. A re-test of the pair’s 50-day MA rate currently at 17.90 is still on the cards given the down trend on the daily RSI and sell signal on the MACD. The 50-day MA coincides with the 38.2% Fibo retracement rate of 17.91 and we would need a convincing break below this level in order to invalidate the move north of 19.00. Currently the 23.6% Fibo rate of 18.22 and the neckline of the parallel channel is holding support for the pair. Fundamentally there is not much supporting the rand. Commodity prices had a woeful first quarter off the back of the 10%+ declines in brent crude oil. Credit markets (US 10year yields) have seen massive daily swings following the fragilities in the banking sector which is eroding risk-on investor sentiment. The only thing that will be fundamentally rand positive is some degree of stabilisation of the US debt market (US 10-year bond yields) and higher commodity prices. As long as the credit markets remain unstable the rand won't be able to gain from its carry trade advantage. In summary; critical supports = 17.90 and 17.68, major resistance = 18.60 and 18.71.
by Goose96
UZThis is very nice, because it is slightly textbook. Yet knowing the fundamentals of the country, we will break through any sell bias you can think of. One day my goal would be to push that price all the way to either less R5/$ for a dollar or even to 1:1. For now I just would like to set a realistic goal of under R15/$. With the right leadership and the fight in our hearts we could and we will and when it happens, I'll come back to this post and clap for us as a nation. 🫱🏿‍🫲🏿🍾👑😁
by Mhangwane1
Rand relief still in playI’m just revising my previous idea. My view for a pullback has not changed. On the 4h the MACD looks set to cross to a sell signal while we still have a degree of bearish divergence on the RSI. A break below 18.35 will allow the rand to pull the pair lower towards the 23.6 Fibo rate at 18.10. I do however expect some support in the range between 18.17 and 18.22. The longer-term move towards the parallel channel neckline and blue 61.8% Fibo retracement rate of 17.83 (as per my previous idea) still seems probable given the overbought status of the dollar across the board. I however do not see the rand pulling the pair below 17.83-17.87 at this stage.
Short
by Goose96
Rand pullbackTechnical indicators and fundamentals are lining up for a reasonable rand pull back as per my previous idea. I expect the rand to pull the pair lower onto the 23.6% Fibo retracement rate and psychological rate of 18.00. A break below 18.00 will see the pair fall onto the critical support on the blue 61.8% Fibo retracement rate of 17.84 which coincide with the neckline of the broken upward channel and the black 38.2% Fibo retracement rate. Fundamentals which are supporting some relief for the battered rand are most notably the easing of the selling pressure on US bonds. The US 10-year yield declined for the past two sessions after touching a high of 3.975% and is currently sitting at 3.865%. This will in turn cause the upward pressure on the dollar (DXY) to lose momentum. Additionally selling pressure on US equity markets are also subsiding. All of these factors are rand positive as it supports risk-on investor sentiment. Technically on the 4h there is bearish divergence on the RSI while we have a sell signal on the MACD. On the daily, the MACD buy signal is rolling over while the RSI is deep in overbought zones. All of which are rand positive.
Short
by Goose96
1
Wide turbulent ranges for the ZARReferring back to my long-term idea posted in January (linked below “1H2023 USD/ZAR weekly timeframe”) I believe that the pair has started its 5th impulse wave higher towards the 2020 high around the 19.30’s after the failed break below the critical support rate of 16.80. The rand has depreciated for five consecutive weeks since mid-January which has seen the local unit slide roughly 7.65%. The economic calendar for this week is a heavy one with a host of local and international events and data prints which is expected to throw the pair into a wide trading range. Locally, SA’s finance minister will present the updated budget tomorrow. The main point of discussion that investors will look out for is Eskom and it is anticipated that the government will advance their plans to take on a sizeable amount of debt from the ailing power utility. The rand also faces a potential grey listing by the FATF this week. Honestly, don’t expect any local factors that will be rand positive anytime soon. Internationally, Wednesday’s FOMC meeting results will be released which will probably just support the Fed’s recent hawkish sentiment. To wrap up the week, US GDP results for 4Q2022 will be released and on Friday the US PCE price index will be updated, the Fed’s preferred measure of inflation. It’s difficult to make a call how these data prints will influence investor sentiment. Despite all the above factors that are undoubtedly rand negative, the rand could pull the pair lower towards the 61.8% Fibo rate of 17.84 if risk-on sentiments flow into the markets following the FOMC minutes, US GDP and PCE data prints. The rand tends to pullback aggressively after an uptrend, it overshoots like a rubber band to the top and bottom side. If this pullback materializes, buying at rates around 17.80 may be favourable. The support levels currently sit on the psychological rate of 18.00, 23.6% Fibo at 17.95 and then the critical support at 17.83 which coincides with the neckline of the broken parallel channel. I’m personally looking to leave buy limit orders between 17.75 and 17.85. A break above 18.28/18.30 will invalidate the expected pullback. Technically the daily MACD seems to be rolling over and could cross to a sell signal while the RSI is sitting in overbought zones at 67.85 which supports this expected pullback. Two factors that also support this USD/ZAR pullback is my expected pullback in the DXY and the fact that Platinum is finding support around $920 per oz (ideas linked below).
Short
by Goose96
3
Short-term 4H chartThe rand had a tough week at the office last week which saw the local unit depreciate roughly 2.37% against the dollar. Risk-on sentiment gained some enthusiasm following Powell’s speech on Tuesday which hit the right notes regarding the Fed’s self-proclaimed victory over inflation. The sentiment however soured after US CPI numbers for the month of December were revised higher later in the week. The combination of negative local factors and the dampened risk-on sentiment saw the pair break past the critical resistance rate of 17.83 (blue 61.8% Fibo retracement rate) to touch the November 2022 high of 17.95. Tuesday’s US CPI results for January most definitely has market moving potential which could put the rand back on the ropes but there is potential for the rand to attempt to get the pair back below the critical rate of 17.83. The bearish divergence on the 4h RSI and the rising wedge formation is signalling a move lower towards the neckline of the upward channel and the 23.6% Fibo retracement rate at 17.70. I’m planning to drop some sell-limit orders above 17.85 with a take profit area between 17.60 (blue 50% Fibo retracement rate) and 17.70. There is every possibility that the rand could pull the pair as low as the critical support at 17.50 (orange 23.6% Fibo retracement rate as mentioned in previous ideas) depending on how markets digest the latest US CPI results on Tuesday, but I don’t see the rand maintaining rates below 18.00 for too long given the current macro backdrop. A failed break below 17.50 could see the pair climb back to the 2022 highs in the 18.50’s. (I'll post a longer-term daily and weekly timeframe idea during the week. I'm bearish on the rand over the longer-term)
Short
by Goose96
6
Catching pullback zonesThe dollar strength following Friday’s strong non-farm payrolls print continued in yesterday’s session which allowed the USDZAR pair to break through the blue 50% Fibo retracement rate of 17.61. The pair seems to have lost some upward momentum after hitting a high of 17.70. The rate of 17.61 will swing from a resistance to a support and a break below it will allow the rand to pull the pair onto the neckline of the updated green parallel channel and lower towards the orange 23.6% Fibo retracement rate of 17.50 (I’ll drop a daily timeframe in the comments for context) and the green 23.6% Fibo retracement rate of 17.46 (support range 1). Fundamentally there is not much supporting a strong pullback for the rand so the red zone between 17.46 and 17.50 is looking like an attractive buy zone (s1). The January risk-on sentiment was dealt a reality check last week which has seen dollar strengthen across the board and US equity markets are looking poised to pull back from their current overbought zones, which is rand negative. In that breath, it is however not unlikely that we see a deeper pullback into the range between 17.30 and 17.38 (s2). Technical indicators on the 4H chart is supporting this pullback; the RSI is trending downwards after falling out of the overbought zone and the buy signal of the MACD is losing momentum and may switch to a sell signal if the expected pull back materializes. Regarding our daily indicators, the RSI is still trending higher and the MACD buy signal is still solid. Looking over at the DXY, the index hit its 50-day MA resistance rate at 103.642 and its technical indicators are also supportive of a pullback for the greenback.
by Goose96
3
Reassessment timeTime to reassess my position on the rand. I expected the 50-day MA rate of 17.15 to hold support for the pair during Wednesday’s turbulent session but Powell’s dovish comments regarding the Fed’s “successful fight against inflation” sent the dollar packing across the board. Equity markets staged an aggressive rally since Powell failed to decisively comment when questioned whether he was concerned about the stock market’s strong start to the year. The SPX and NDX have rallied roughly 2.67% and 5.76%, respectively, since Wednesday’s Fed rate decision. Risk-on sentiment certainly gripped the market in the past two session and the rand hopped on and rode the wave all the down to the 200-day MA level of 16.95. The break below the 38.2% green Fibo rate and the top of the green first impulse wave theoretically invalidates the 5-wave impulse higher towards 17.60 as previously predicted. A break and close below the green 61.8% Fibo retracement rate of 16.99 and the 200-day MA rate of 16.95 will allow the rand to pull the pair back onto the yearly low of 16.70, that is if the current risk-on sentiment is maintained. On the flip side a close above the 50-day MA rate of 17.15 will see the rand weaken back towards the resistance range of 17.39 and 17.50. The DXY pulled back most its gains yesterday following the FOMC demolishing of the greenback, so some rationality is coming back to the market. Given the current local uncertainties and easing of commodity prices, particularly platinum, I don’t see the rand holding the pair below the psychological level of 17.00. Technically the 4h MACD is losing momentum and looks set to cross to a buy signal and the RSI has bounced convincingly off the oversold zone which is rand negative. Don’t forget about today’s NFP’s print, it has the potential to move the markets later this afternoon.
by Goose96
12
Pre-fed 4H USDZARThe upward momentum seems to be fading as we await the open of the US session. The orange 23.6% Fibo retracement at 17.50 is a strong resistance and psychological rate for the pair and I don’t see it giving way before the major Fed event tomorrow. Over the slightly longer term I’m bearish on the rand after the pair broke above the key 50-day MA level at 17.15 and 17.30. A pullback seems to be on the cards as the 4H RSI is topping out just under the overbought zone and the buy signal on the MACD is losing momentum. The pullback will likely see the pair slide into the range between the green 38.2% Fibo retracement rate at 17.18 and the 23.6% Fibo retracement rate at 17.30. The rate at 17.30 will also swing from a previous resistance to a support. (I’m personally planning to leave a few buy limit orders scattered in this range). Given all the market moving data releases and Central bank announcements I suspect we could see the rand weaken towards the range between 17.60 and 17.70. A break above this resistance range will allow the pair to climb higher towards the blue 61.8% Fibo retracement rate of 17.84. (I'll drop the daily timeframe chart in the comments below for context regarding the Fibo retracements levels I'm using) Also see attached my idea for the DXY as we prepare for Fed week!
Long
by Goose96
6
USD/ZAR. Big data expected to bring big movesThe rand managed to pull the pair to a daily close below the 50-day MA, yesterday, off the back of a broadly weaker dollar. There was no data driving the weakness in the greenback but it seems the weakness is stemming from the “plausible soft landing” narrative and the stable decline in US 10-year bond yield since the beginning of the year. Today’s calendar has the potential to kick-start a fresh trend on the USD/ZAR pair. The 50-day MA, currently at 17.14, has acted like a magnet these past 5 trading sessions with no clear break as of yet. The 200-day MA at 16.91 is creeping higher and will serve as a key support rate in today’s potentially wide range session. The 200-day MA also coincides with the neckline of the blue channel. Events for the day: The SARB will announce their first interest rate decision today and it is widely expected that the bank will hike rate by another 50bps up to 7.50%, no real surprises there. The SARB will stick to their hawkish stance as SA inflation (7.500%) still sits stubbornly above the 3-6% target range. The volatility will come from the US GDP print for 2022Q4. QoQ growth is expected to print 2.6% down from 3.2% in 2022Q3. It is becoming increasingly difficult to gauge how the markets will digest macro data releases but a print below expectations will be dollar positive as it will dent the “soft landing” narrative while a higher-than-expected print will add fuel to the risk-on fire in my opinion. Scenarios: 1. Stronger than expected US GDP: USD/ZAR to break below the 200-day MA and possibly test the current yearly low of 16.70. 2. Weaker than expected US GDP: Confirmed break above the 50-day MA to push higher and test the resistance range between 17.39 (blue 38.2% Fibo retracement) and 17.50 (orange 23.6% Fibo retracement rate). I’m personally favouring this scenario, but it obviously depends on how they cook the data haha. Technical indicators: Bullish divergence is still present on the RSI (rand negative). The MACD indicator is still holding a daily buy signal, but its momentum has pattered out this week, but the buy signal is still rand negative. The DXY is also hovering in a strong support range and its weekly RSI is nearing oversold levels which may support the greenback in the weeks to come (see the attached snippet)
by Goose96
2
Oscillations around 200-day MA support (short-term)The rand managed to pull the pair below the 200-day MA, currently at 16.82, last week Thursday following the US CPI print. The pair is however finding support around its 200-day MA and the dollar strength in today's early morning session has seen the pair blast up to the blue 23.6% Fibo retracement rate of 17.12. The macro risk-on factors mentioned below are rand positive, but the technical indicators are not. The divergence on the RSI and the buy signal on the MACD have me leaning towards another test of the 50-day MA rate of 17.19 and a break higher towards the 38.2% Fibo retracement rate of 17.39 and the current yearly high of 17.44. The US CPI print for December added fresh wind into the risk-on sails as the CPI result was in line with expectations at 6.5% and 0.6% lower than November’s print. Last week’s lower than expected initial jobless claims coupled with the strong December non-farm payrolls data is also supportive of the narrative of a strong US labour market. On paper US inflation seems to be easing and its labour market is looking resilient which has the market optimistic for a ‘soft landing’ following the current rate hiking cycle. The current risk-on sentiment in the markets can also be seen in the early year gains for the S&P500 and Nasdaq 100 which has gained roughly 5.50% and 7.02%, respectfully, since the start of the year.
Long
by Goose96
2
Daily USDZAR 50-day and 200-day MA squeezeThe DXY and the US 10-year yield fell sharply following Friday’s better than expected non-farm payrolls report for the month of December 2021 which saw the pair reject the 50-day MA at 17.30 as well as the blue 38.2% Fibo retracement level of 17.44. The dollar started this week on the back foot in the local session which has allowed the rand to test the psychological rate of 17.00. The pair is currently oscillating between its 200-day MA at 16.76 and the 50-day MA at 17.30 with no clear direction as of yet. As per my weekly timeframe idea (link in the description) a failed break below the support range between 16.80-16.86 could see the pair break above the 50-day MA and higher towards the blue 61.8% Fibo retracement rate of 17.87. A break below 16.80 will however allow the rand to pull the pair to the orange 50% Fibo retracement level of 16.36. In terms of technical indicators, the RSI is showing divergence which is rand negative and has me leaning towards a break above 17.30 over a break below 16.76. The MACD is currently holding an unconvincing buy signal so I’m not placing any significance on it at the moment. I’ll update the idea since I’m not giving any conclusive direction for the pair.
by Goose96