Technical Analysis – USDZAR still in an uptrend, but move above 15.50 needed for validation
Posted on October 7, 2019 at 2:52 pm GMT
Marios Hadjikyriacos, XM Investment Research Desk
USDZAR remains in a broader uptrend, with the price action on the daily chart still characterized by a series of higher peaks and higher troughs. The upward sloping 50-day simple moving average (SMA) reinforces this notion. That said, a clear break above 15.50 is needed to signal that this uptrend is back in play.
Short-term momentum oscillators concur, and suggest that the latest move higher may continue for now. The RSI rebounded off its 50 level and is pointing higher, while the MACD is both in positive waters and above its red trigger line.
If the buyers stay in control, their first target would likely be the 15.50 region, the one-year high reached back in August. A successful push higher would reinforce the bullish picture, opening the door for a test of 15.97, this being the May 2016 peak. Even higher, the 16.25-16.30 region would attract attention next.
On the downside, a move below the 50-day SMA –currently at 15.00 – could see the bears challenging the 14.50 area, where the lower Bollinger band at 14.44 is also roughly located. The 200-day SMA at 14.37 is not far away either. If sellers violate this important crossroads, that would mark a lower low on the daily chart, turning the picture to neutral and paving the way for the 13.82 level.
In short, a move above 15.50 could give the bulls more fuel. Otherwise, a break below the crossroads of 14.50, the lower Bollinger band, and the 200-day SMA, would call the entire uptrend into question.