ZAREUR pops to highest close since March 26th
South African Rand/Euro (ZAREUR) Technical Analysis Report for May 22, 2020 | by Techniquant Editorial Team
Moving higher for the 3rd day in a row, ZAREUR ended the week 4.83% higher at 0.0521 after gaining 2 pips (0.39%) today. Today's close at 0.0521 marks the highest recorded closing price since March 26th. Trading up to 6 pips lower after the open, ZAR/EUR managed to reverse during the session as bulls took control ending the day above its opening price. Closing above Thursday's high at 0.0520, the currency confirmed its breakout through the prior session high after trading up to 2 pips above it intraday.
Daily Candlestick Chart (ZAREUR as at May 22, 2020):
Friday's trading range has been 9 pips (1.73%), that's slightly 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 slightly above the market's average weekly trading range. The longer-term, monthly volatility is currently higher than usual for ZAREUR.
One bearish candlestick pattern matches today's price action, the Hanging Man.
After trading down to 0.0513 earlier during the day, the market bounced off the key technical support level at 0.0513 (S1). The failure to close below the support could increase that levels significance as support going forward. When prices bounced off a significant support level the last time on May 7th, ZAREUR gained 1.21% on the following trading day.
With another close above the upper Bollinger Band, prices are confirming their strong upward momentum in the short-term. A drop back into the Bollinger Band on the next trading day though might signal a potential change in momentum that could lead to a correction back down towards the center of the Bollinger Bands at 0.0500.
Although the forex pair is experiencing a short-term uptrend, this might just be a correction, as both the medium and long-term trends are still bearish.
Among the eight market conditions that our pattern recognition engine identified today, the statistics for the OHLC Patterns based market condition "Hanging Man" stand out. Its common bearish interpretation has been confirmed for ZAR/EUR. Out of 48 times, ZAREUR closed lower 50.00% 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 52.08% with an average market move of -0.48%.