Holiday Whipsaw Trading Range Taking No Prisoners
The USD/ZAR has provided speculators with a choppy trading range this week and this is likely to continue throughout the holiday season.
As of this writing, the USD/ZAR is within sight of the 16.00000 juncture, but conditions are choppy as light holiday trading is producing quick changes of value with sporadic spikes. Traders who choose not to use risk management today and tomorrow are simply playing with fire. Risk management is essential within the USD/ZAR. A low of nearly 15.67000 was demonstrated yesterday and on Tuesday the USD/ZAR was touching the 15.50000 ratio.
On the 15th of December, the USD/ZAR was trading as high as 16.26000 momentarily. And on the 26th of November, the USD/ZAR was near the 16.36000 juncture. Nervous trading conditions have certainly pervaded the USD/ZAR the past month of trading as news about the Omicron variant has made headlines. The danger of the new variant is causing nervousness in the broad markets, but news from South Africa shows that critical condition hospitalizations has dropped statistically.
Trading conditions are likely to remain choppy over the short term and until the New Year holiday is within the rear view mirror. While the USD/ZAR may appear to be overbought around the 16.00000 juncture, traders can clearly see via technical charts a high of 16.04000 was seen only two weeks ago. However, if a trader decides to be a seller upon higher reversals, while hoping to pursue momentum lower this could prove to be a solid speculative wager.
Risk management and the use of conservative leverage will be essential trading tools near term. It does appear global risk appetite is increasing slightly, but with low trading volumes still being generated in the markets, a large order within the USD/ZAR which is delivered unexpectedly could cause an imbalance which creates momentary spikes. Traders looking at yesterday’s lows and the support levels tested on Tuesday cannot be blamed for believing lower values will be exhibited, but traders need to remain realistic.
Quick hitting trades which try to capture nearby support as take profit ratios may prove to be a worthwhile selling position short term. However, traders are urged to monitor their accounts and keep stop loss ratio cautiously close, to avoid sudden spikes higher which could develop if a financial institution places a large buying transaction into the USD/ZAR which moves the market in a hurry.
South African Rand Short-Term Outlook
Current Resistance: 16.050500
Current Support: 15.85000
High Target: 16.1500
Low Target: 15.66000