ZARJPY closes below its opening price unable to hold early session gains
South African Rand/Japanese Yen (ZARJPY) Technical Analysis Report for Feb 17, 2020 | by Techniquant Editorial Team
ZARJPY ended Monday at 7.33 losing 3 pips (-0.41%) on low volume. Trading 3 pips higher after the open, the currency was unable to hold its gains as the bears took control ending the day below its opening price. The last time this happened on February 12th, ZARJPY lost -0.94% on the following trading day. Closing within the previous day's range, prices failed to decisively move beyond the prior day's trading range in a lackluster session.
Daily Candlestick Chart (ZARJPY as at Feb 17, 2020):
Monday's trading range has been 8 pips (1.09%), that's far below the last trading month's daily average range of 12 pips. Weekly volatility is also lower, being below the market's average weekly trading range. The longer-term, monthly volatility is currently slightly higher than usual for ZARJPY.
During the whole day, prices traded within the previous day's range, unable to trade above the prior day's high or below the previous day's low forming an Inside Bar. Additionally, one bullish candlestick pattern matches today's price action, the Last Engulfing Bottom Pattern.
Prices are trading close to the key technical support level at 7.31 (S1). Unable to break through the key technical resistance level at 7.40 (R1), the pair closed below it after spiking up to 7.40 earlier during the day. The failure to close above the resistance could increase that levels significance going forward.
The FX pair shows strength in the short-term supported by its long-term uptrend with only the medium-term trend being bearish.
Selling might accelerate should prices move below the close-by swing low at 7.29 where further sell stops could get triggered. With prices trading close to this year's low at 7.20, downside momentum might speed up should ZAR/JPY break out to new lows for the year. As prices are trading close to February's high at 7.48, upside momentum could accelerate should the forex pair mark new highs for the month.
Among the six market conditions that our pattern recognition engine identified today, the statistics for the OHLC Patterns based market condition "Last Engulfing Bottom Pattern" stand out. Although it is usually interpreted as bullish, it has actually shown to be bearish for ZAR/JPY. Out of 62 times, ZARJPY closed lower 58.06% 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 48.39% with an average market move of -0.15%.
With three Major FX Pairs closing higher and three closing lower today, the winners of the day are USDJPY surging 0.09% and EURUSD gaining 0.04%. On the flipside the worst performers have been GBPUSD closing -0.31% lower and USDCHF losing -0.14%. Looking at the other Minor FX Pairs and Crosses, the winners of the day have been CHFZAR surging 0.64% and EURZAR closing 0.53% higher. The worst performers of the day have been GBPSGD tanking -0.53% and GBPCHF closing -0.47% lower. Read more