ZARCHF breaks below key technical support level
South African Rand/Swiss Franc (ZARCHF) Technical Analysis Report for Sep 18, 2020 | by Techniquant Editorial Team
ZARCHF finished the week 2.76% higher at 0.0558 after losing 4 pips (-0.71%) today. Trading 3 pips higher after the open, ZAR/CHF was unable to hold its gains as the bears took control ending the day below its opening price. The last time this happened on August 26th, ZARCHF lost -0.74% on the following trading day. Closing within the previous day's range, prices missed to decisively move beyond the prior day's trading range in a lackluster session.
Daily Candlestick Chart (ZARCHF as at Sep 18, 2020):
Friday's trading range has been 7 pips (1.25%), that's below the last trading month's daily average range of 10 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 ZARCHF.
In spite of a strong opening the FX pair closed below the previous day's open and close, forming a bearish Engulfing Candle. Additionally, two candlestick patterns are matching today's price action, the Bearish Short Candle and the Black Candle which are both known as bearish patterns.
Prices broke below the key technical support level at 0.0561 (now R1), which is likely to act as resistance going forward.
Crossing below the upper Bollinger Band, prices have lost at least some of their upward momentum in the short-term and could now be heading back down towards the mean of the Bollinger Bands at 0.0545.
The market shows strength in the short-term supported by its long-term uptrend with only the medium-term trend being bearish.
Trading close to July's high at 0.0571 we might see further upside momentum if potential buy stops at the level get activated.
Among the eight market conditions that our pattern recognition engine identified today, the statistics for the Technical Indicators based market condition "Close crossed below the upper Bollinger Band" stand out. Its common bearish interpretation has been confirmed for ZAR/CHF. Out of 58 times, ZARCHF closed lower 51.72% of the time on the next trading day after the market condition occurred. The optimal exit for swing trading this condition on the short side has been after 10 trading days, showing a win rate of 70.69% with an average market move of -1.33%.