ZARUSD runs into sellers again around 0.0570
South African Rand/US Dollar (ZARUSD) Technical Analysis Report for May 22, 2020 | by Techniquant Editorial Team
ZARUSD finished the week 5.58% higher at 0.0568 after flat today. Closing within the prior day's range, prices failed to decisively move beyond the previous day's trading range.
Daily Candlestick Chart (ZARUSD as at May 22, 2020):
Friday's trading range has been 11 pips (1.94%), that's slightly above the last trading month's daily average range of 11 pips. Weekly volatility is also higher, being above the market's average weekly trading range. The longer-term, monthly volatility is currently slightly higher than usual for ZARUSD.
During the whole day, prices traded within the prior day's range, unable to trade above the previous day's high or below the prior day's low forming an Inside Bar. Additionally, four candlestick patterns are matching today's price action, the Bearish Harami Cross Pattern, the Hanging Man and the Northern Doji which are known as bearish patterns and one neutral pattern, the Doji. The last time a Northern Doji showed up on Tuesday, ZARUSD actually gained 2.39% on the following trading day.
After having been unable to move above 0.0571 in the previous session, the pair ran into sellers again around the same price level today, missing to move higher than 0.0570.
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 although could signal a potential change in momentum that might lead to a correction back down towards the center of the Bollinger Bands at 0.0544.
While 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 0.0571 where further buy stops could get activated.
Among the eight market conditions that our pattern recognition engine identified today, the statistics for the OHLC Patterns based market condition "Bearish Harami Cross Pattern" stand out. Its common bearish interpretation has been confirmed for ZAR/USD. Out of 4 times, ZARUSD closed lower 75.00% 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 nine trading days, showing a win rate of 50.00% with an average market move of -0.20%.