ZARJPY still stuck within tight trading range
South African Rand/Japanese Yen (ZARJPY) Technical Analysis Report for Jan 24, 2020 | by Techniquant Editorial Team
Moving lower for the 2nd day in a row, ZARJPY finished the week -0.26% lower at 7.59 after losing 1 pip (-0.13%) today. Trading 6 pips higher after the open, the FX pair was unable to hold its gains as the bears took control ending the day below its opening price. The last time this happened on Tuesday, ZARJPY actually gained 1.19% on the following trading day. Closing within the previous day's range, prices failed to decisively move beyond the prior day's trading range.
Daily Candlestick Chart (ZARJPY as at Jan 24, 2020):
Friday's trading range has been 10 pips (1.32%), that's slightly below the last trading month's daily average range of 11 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 ZARJPY. Prices continued to consolidate within a tight trading range between 7.53 and 7.68 where it has been caught now for the whole last trading week.
One bearish candlestick pattern matches today's price action, the Bearish Spinning Top.
Unable to break through the key technical resistance level at 7.65 (R1), ZAR/JPY closed below it after spiking up to 7.66 earlier during the day. The failure to close above the resistance might increase that levels significance going forward. The pair found buyers again today around 7.56 for the third trading day in a row after having found demand at 7.57 in the previous session and at 7.57 two days ago.
Although the forex pair is currently in a short-term downtrend, this could just be a correction, as both the medium and long-term trends are still bullish.
Buying might speed up should prices move above the close-by swing high at 7.68 where further buy stops could get triggered. Selling might accelerate should prices move below the nearby swing low at 7.53 where further sell stops could get activated. With prices trading close to this year's low at 7.45, downside momentum might speed up should the currency break out to new lows for the year.
Among the eight market conditions that our pattern recognition engine identified today, the statistics for the OHLC Patterns based market condition "Close to Swing Low" stand out. While it is usually interpreted as neutral, it has actually shown to be bullish for ZAR/JPY. Out of 735 times, ZARJPY closed higher 52.38% 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 51.97% with an average market move of 0.09%.
With five out of the seven Major FX Pairs closing lower today, the ones that stand out on the negative side are GBPUSD losing -0.41% and AUDUSD closing -0.34% lower. On the flipside the best performers have been USDCHF closing 0.23% higher and USDCAD gaining 0.14%. Looking at the other Minor FX Pairs and Crosses, the winners of the day have been USDNOK surging 0.57% and USDPLN closing 0.53% higher. The worst performers of the day have been GBPJPY tanking -0.6% and AUDJPY closing -0.53% lower. Read more