ZARJPY runs into sellers again around 6.14
South African Rand/Japanese Yen (ZARJPY) Technical Analysis Report for May 22, 2020 | by Techniquant Editorial Team
ZARJPY ended the week 6.08% higher at 6.11 after edging lower 1 pip (-0.16%) today. 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 May 22, 2020):
Friday's trading range has been 13 pips (2.12%), that's slightly below the last trading month's daily average range of 14 pips. Things look different on the weekly timeframe, where the market's trading range of the last week has been above 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. After moving higher in the prior session, the forex pair closed lower but above the previous day's open today, forming a bearish Harami Candle. Additionally, two candlestick patterns are matching today's price action, the Bearish Spinning Top and the Hanging Man which are both known as bearish patterns.
Unable to break through the key technical resistance level at 6.12 (R1), ZAR/JPY closed below it after spiking up to 6.14 earlier during the day. The failure to close above the resistance might increase that levels significance going forward. When prices bounced off a significant resistance level the last time on February 26th, ZARJPY lost -1.80% on the following trading day. After having been unable to move above 6.15 in the prior session, the market ran into sellers again around the same price level today, failing to move higher than 6.14.
With another close above the upper Bollinger Band, prices are confirming their strong upward momentum in the short-term. A drop back into the Bollinger Band on the next trading day though could signal a potential change in momentum that might lead to a correction back down towards the center of the Bollinger Bands at 5.82.
Although the FX pair is experiencing a short-term uptrend, this could just be a correction, as both the medium and long-term trends are still bearish.
Buying might speed up should prices move above the close-by swing high at 6.15 where further buy stops could get triggered.
Among the eight market conditions that our pattern recognition engine identified today, the statistics for the OHLC Patterns based market condition "Hanging Man" stand out. Its common bearish interpretation has been confirmed for ZAR/JPY. Out of 52 times, ZARJPY closed lower 65.38% 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 51.92% with an average market move of -0.51%.
With four out of the seven Major FX Pairs closing lower today, the ones that stand out on the negative side are GBPUSD losing -0.47% and EURUSD closing -0.44% lower. On the flipside the best performers have been USDCAD closing 0.33% higher and USDCHF gaining 0.08%. Looking at the other Minor FX Pairs and Crosses, the winners of the day have been USDCZK surging 1.09% and USDHUF closing 0.9% higher. The worst performers of the day have been USDMXN tanking -0.58% and SGDHKD closing -0.51% lower. Read more