ZARGBP breaks below Wednesday's low
South African Rand/British Pound (ZARGBP) Technical Analysis Report for Mar 26, 2020 | by Techniquant Editorial Team
ZARGBP ended Thursday at 0.0473 losing 13 pips (-2.67%). The bears were in full control today, moving the market lower throughout the whole session. Closing below Wednesday's low at 0.0480, the currency confirmed its breakout through the previous session low after trading up to 8 pips below it intraday.
Daily Candlestick Chart (ZARGBP as at Mar 26, 2020):
Thursday's trading range has been 19 pips (3.91%), that's above the last trading month's daily average range of 16 pips. Things look different on the weekly timeframe, where the market's trading range of the last week has been slightly below the market's average weekly trading range. The longer-term, monthly volatility is currently slightly higher than usual for ZARGBP.
Two candlestick patterns are matching today's price action, the Last Engulfing Bottom Pattern which is known as bullish pattern and one bearish pattern, the Black Candle.
Prices broke below the key technical support level at 0.0479 (now R1), which is likely to act as resistance going forward. After having been unable to move above 0.0493 in the prior session, the FX pair ran into sellers again around the same price level today, missing to move higher than 0.0491. The last time this happened on March 19th, ZARGBP lost -2.40% on the following trading day.
The trend is clearly bearish, showing an intact downtrend in the short, medium and long-term.
With prices trading close to this year's low at 0.0461, downside momentum could speed up should the pair break out to new lows for the year.
Among the nine market conditions that our pattern recognition engine identified today, the statistics for the OHLC Patterns based market condition "Last Engulfing Bottom Pattern" stand out. While it is usually interpreted as bullish, it has actually shown to be bearish for ZAR/GBP. Out of 129 times, ZARGBP closed lower 52.71% 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 58.14% with an average market move of -0.41%.