ZARGBP breaks below Monday's low
South African Rand/British Pound (ZARGBP) Technical Analysis Report for Jun 30, 2020 | by Techniquant Editorial Team
ZARGBP ended the month 0.65% higher at 0.0465 after losing 6 pips (-1.27%) today. The bears were in full control today, moving the market lower throughout the whole session. Closing below Monday's low at 0.0466, ZAR/GBP confirmed its breakout through the prior session low after trading up to 2 pips below it intraday.
Daily Candlestick Chart (ZARGBP as at Jun 30, 2020):
Tuesday's trading range has been 7 pips (1.49%), that's slightly above the last trading month's daily average range of 7 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 lower than usual for ZARGBP.
Despite 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 Belt-hold and the Black Candle which are both known as bearish patterns. The last time a Bearish Belt-hold showed up on March 16th, ZARGBP actually gained 2.46% on the following trading day.
The currency closed back below the 100-day moving average at 0.0465 for the first time since June 24th.
Though still in a long-term downtrend, the short and medium-term trends both turned bullish already.
Buying might speed up should prices move above the nearby swing high at 0.0472 where further buy stops could get activated. Selling might accelerate should prices move below the close-by swing low at 0.0459 where further sell stops could get triggered. As prices are trading close to June's low at 0.0457, downside momentum might speed up should the pair mark new lows for the month.
Among the 11 market conditions that our pattern recognition engine identified today, the statistics for the OHLC Patterns based market condition "Bearish Belt-hold" stand out. While it is usually interpreted as bearish, it has actually shown to be bullish for ZAR/GBP. Out of 14 times, ZARGBP closed higher 78.57% 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 57.14% with an average market move of 0.25%.