ZARCHF closes lower for the 4th day in a row
South African Rand/Swiss Franc (ZARCHF) Technical Analysis Report for Jul 31, 2020 | by Techniquant Editorial Team
Moving lower for the 4th day in a row, ZARCHF ended the month -2.01% lower at 0.0535 after losing 7 pips (-1.29%) today. Today's close at 0.0535 marks the lowest recorded closing price since May 19th. Closing below Thursday's low at 0.0538, the market confirmed its breakout through the prior session low after trading up to 6 pips below it intraday.
Daily Candlestick Chart (ZARCHF as at Jul 31, 2020):
Friday's trading range has been 12 pips (2.21%), that's far above the last trading month's daily average range of 8 pips. Weekly volatility is also higher, being way above the market's average weekly trading range. The longer-term, monthly volatility is currently higher than usual for ZARCHF.
One bearish candlestick pattern matches today's price action, the Black Candle.
Prices are trading close to the key technical support level at 0.0531 (S1). Unable to break through the key technical resistance level at 0.0543 (R1), the currency closed below it after spiking up to 0.0544 earlier during the day. The failure to close above the resistance could increase that levels significance going forward. When prices bounced off a significant resistance level the last time on Tuesday, ZARCHF lost -0.54% on the following trading day.
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 0.0557.
The trend is clearly bearish, showing an intact downtrend in the short, medium and long-term.
Among the five market conditions that our pattern recognition engine identified today, the statistics for the Price Action based market condition "4 Consecutive Lower Closes" stand out. While it is usually interpreted as bearish, it has actually shown to be bullish for ZAR/CHF. Out of 64 times, ZARCHF closed higher 57.81% 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 three trading days, showing a win rate of 51.56% with an average market move of 0.19%.