ZARGBP closes within prior day's range
South African Rand/British Pound (ZARGBP) Technical Analysis Report for Feb 14, 2020 | by Techniquant Editorial Team
ZARGBP ended the week -0.19% lower at 0.0514 after gaining 1 pip (0.19%) today. Closing within the prior day's range, prices failed to decisively move beyond the previous day's trading range.
Daily Candlestick Chart (ZARGBP as at Feb 14, 2020):
Friday's trading range has been 6 pips (1.17%), that's slightly below the last trading month's daily average range of 7 pips. Weekly volatility is also lower, being below the market's average weekly trading range. The longer-term, monthly volatility is currently slightly lower than usual for ZARGBP.
After moving lower in the prior session, ZAR/GBP managed to close higher but below the previous day's open, forming a bullish Harami Candle. Additionally, one bullish candlestick pattern matches today's price action, the Tweezer Bottom. The last time a Tweezer Bottom showed up on January 24th, ZARGBP actually lost -1.32% on the following trading day.
Prices are trading close to the key technical support level at 0.0511 (S1). Unable to break through the key technical resistance level at 0.0517 (R1), the market closed below it after spiking up to 0.0518 earlier during the day. The failure to close above the resistance could increase that levels significance going forward. After having been unable to move lower than 0.0512 in the prior session, the pair found buyers again around the same price level today at 0.0512.
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.
Selling could accelerate should prices move below the close-by swing low at 0.0511 where further sell stops might get activated. With prices trading close to this year's low at 0.0504, downside momentum could speed up should the currency break out to new lows for the year. As prices are trading close to February's low at 0.0505, downside momentum might accelerate should the FX pair mark new lows for the month.
Among the five market conditions that our pattern recognition engine identified today, the statistics for the OHLC Patterns based market condition "Bullish Harami Candle" stand out. Though it is usually interpreted as bullish, it has actually shown to be bearish for ZAR/GBP. Out of 97 times, ZARGBP closed lower 57.73% 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 53.61% with an average market move of -0.24%.