GBPZAR closes within prior day's range
British Pound/South African Rand (GBPZAR) Technical Analysis Report for Oct 26, 2020 | by Techniquant Editorial Team
Moving lower for the 3rd day in a row, GBPZAR ended Monday at 21.0983 losing 260 pips (-0.12%). Today's close at 21.0983 marks the lowest recorded closing price since September 18th. Trading 1005 pips higher after the open, the FX pair was unable to hold its gains as the bears took control ending the day below its opening price. Closing within the previous day's range, prices missed to decisively move beyond the prior day's trading range.
Daily Candlestick Chart (GBPZAR as at Oct 26, 2020):
Monday's trading range has been 2492 pips (1.18%), that's slightly below the last trading month's daily average range of 2809 pips. Weekly volatility is also lower, being slightly below the market's average weekly trading range. The longer-term, monthly volatility is currently slightly lower than usual for GBPZAR.
In a volatile session, prices traded above the previous day's high as well as below the prior day's low, forming a bearish Outside Bar. Additionally, one bearish candlestick pattern matches today's price action, the Bearish Spinning Top. The last time a Bearish Spinning Top showed up on October 20th, GBPZAR actually gained 0.56% on the following trading day.
Unable to break through the key technical resistance level at 21.2518 (R1), the market closed below it after spiking up to 21.2728 earlier during the day. The failure to close above the resistance could increase that levels significance going forward. After having been unable to move above 21.2666 in the previous session, the forex pair ran into sellers again around the same price level today, missing to move higher than 21.2728.
With another close below the lower Bollinger Band, prices are confirming their strong downward momentum in the short-term. A rally back into the Bollinger Band on the next trading day although might signal a potential change in momentum that could lead to a correction back up towards the center of the Bollinger Bands at 21.4309.
The trend is clearly bearish, showing an intact downtrend in the short, medium and long-term.
Further selling might move prices lower should the market test September's close-by low at 20.8844.
Among the seven market conditions that our pattern recognition engine identified today, the statistics for the Price Action based market condition "Bearish Intraday Reversal" stand out. While it is usually interpreted as bearish, it has actually shown to be bullish for GBP/ZAR. Out of 492 times, GBPZAR closed higher 55.49% of the time on the next trading day after the market condition occurred. The optimal exit for swing trading this condition on the long side has been after 10 trading days, showing a win rate of 54.67% with an average market move of 0.38%.
With four out of the seven Major FX Pairs closing lower today, the ones that stand out on the negative side are EURUSD losing -0.44% and AUDUSD closing -0.22% lower. On the flipside the best performers have been USDCAD closing 0.68% higher and USDCHF gaining 0.38%. Looking at the other Minor FX Pairs and Crosses, the winners of the day have been USDTRY surging 1.54% and EURTRY closing 1.12% higher. The worst performers of the day have been TRYJPY tanking -1.37% and CADHKD closing -0.67% lower. Read more