USDZAR closes within previous day's range
US Dollar/South African Rand (USDZAR) Technical Analysis Report for May 22, 2020 | by Techniquant Editorial Team
USDZAR ended the week -5.24% lower at 17.6151 after edging higher 109 pips (0.06%) today. Closing within the previous day's range, prices failed to decisively move beyond the prior day's trading range.
Daily Candlestick Chart (USDZAR as at May 22, 2020):
Friday's trading range has been 3243 pips (1.84%), that's slightly below the last trading month's daily average range of 3662 pips. Things look different on the weekly timeframe, where the market's trading range of the last week has been above the market's average weekly trading range. The longer-term, monthly volatility is currently slightly higher than usual for USDZAR.
During the whole day, prices traded within the previous day's range, unable to trade above the prior day's high or below the previous day's low forming an Inside Bar. After moving lower in the prior session, the currency managed to close higher but below the previous day's open, forming a bullish Harami Candle. Additionally, four candlestick patterns are matching today's price action, the Bullish Harami Cross Pattern and the Southern Doji which are both known as bullish patterns, one bearish pattern, the Gravestone Doji and one neutral pattern, the Doji. The last time a Doji showed up on Tuesday, USDZAR lost -2.29% on the following trading day.
After having been unable to move lower than 17.5172 in the prior session, the FX pair found buyers again around the same price level today at 17.5555.
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 could signal a potential change in momentum that might lead to a correction back up towards the center of the Bollinger Bands at 18.4020.
While the forex pair is currently in a short-term downtrend, this could just be a correction, as both the medium and long-term trends are still bullish.
Selling might speed up should prices move below the nearby swing low at 17.5172 where further sell stops could get activated.
Among the nine market conditions that our pattern recognition engine identified today, the statistics for the OHLC Patterns based market condition "Bullish Harami Cross Pattern" stand out. Its common bullish interpretation has been confirmed for USD/ZAR. Out of 4 times, USDZAR closed higher 100.00% 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 eight trading days, showing a win rate of 75.00% with an average market move of 0.59%.
With four out of the seven Major FX Pairs closing lower today, the ones that stand out on the negative side are GBPUSD losing -0.47% and EURUSD closing -0.44% lower. On the flipside the best performers have been USDCAD closing 0.33% higher and USDCHF gaining 0.08%. Looking at the other Minor FX Pairs and Crosses, the winners of the day have been USDCZK surging 1.09% and USDHUF closing 0.9% higher. The worst performers of the day have been USDMXN tanking -0.58% and SGDHKD closing -0.51% lower. Read more