USDZAR slides to lowest close since March 13th
US Dollar/South African Rand (USDZAR) Technical Analysis Report for Sep 16, 2020 | by Techniquant Editorial Team
Moving lower for the 4th day in a row, USDZAR finished Wednesday at 16.2641 losing 1924 pips (-1.17%). Today's close at 16.2641 marks the lowest recorded closing price since March 13th. The bears were in full control today, moving the market lower throughout the whole session. Closing below Tuesday's low at 16.3938, the market confirmed its breakout through the previous session low after trading up to 1865 pips below it intraday.
Daily Candlestick Chart (USDZAR as at Sep 16, 2020):
Wednesday's trading range has been 2751 pips (1.67%), that's slightly below the last trading month's daily average range of 2979 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 lower than usual for USDZAR.
One bearish candlestick pattern matches today's price action, the Black Candle.
Prices broke below the key technical support level at 16.3433 (now R1), which is likely to act as resistance going forward.
Crossing below the lower Bollinger Band for the first time since August 28th, prices have shown unusually strong downward momentum in the short-term. This might either indicate a potential selling climax after which prices could head back up towards the mean of the Bollinger Bands at 16.7901 or signal the beginning of a strong momentum breakout leading to even lower prices. The last time prices broke out below the lower Bollinger Band on August 28th, USDZAR actually gained 2.09% on the following trading day.
The trend is clearly bearish, showing an intact downtrend in the short, medium and long-term.
Among the seven market conditions that our pattern recognition engine identified today, the statistics for the Technical Indicators based market condition "Close crossed below the lower Bollinger Band" stand out. Although it is usually interpreted as bearish, it has actually shown to be bullish for USD/ZAR. Out of 66 times, USDZAR closed higher 59.09% 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 57.58% with an average market move of 0.69%.
With four out of the seven Major FX Pairs closing higher today, the ones that stand out on the positive side are GBPUSD gaining 0.61% and NZDUSD closing 0.27% higher. On the flipside the worst performers have been USDJPY closing -0.47% lower and EURUSD losing -0.25%. Looking at the other Minor FX Pairs and Crosses, the winners of the day have been GBPPLN surging 0.81% and ZARJPY closing 0.78% higher. The worst performers of the day have been EURZAR tanking -1.42% and CHFZAR closing -1.28% lower. Read more