ZARUSD breaks below Thursday's low
South African Rand/US Dollar (ZARUSD) Technical Analysis Report for Jul 31, 2020 | by Techniquant Editorial Team
Moving lower for the 4th day in a row, ZARUSD ended the month 1.74% higher at 0.0586 after tanking 11 pips (-1.84%) today. This is the biggest single-day loss in over a month. The last time we've seen such an unusually strong single-day loss on June 11th, ZARUSD actually gained 0.69% on the following trading day. Today's close at 0.0586 marks the lowest recorded closing price since July 7th. The bears were in full control today, moving the market lower throughout the whole session. Closing below Thursday's low at 0.0590, the FX pair confirmed its breakout through the previous session low after trading up to 5 pips below it intraday.
Daily Candlestick Chart (ZARUSD as at Jul 31, 2020):
Friday's trading range has been 14 pips (2.35%), that's far above the last trading month's daily average range of 9 pips. Weekly volatility is also higher, being above the market's average weekly trading range. The longer-term, monthly volatility is currently slightly lower than usual for ZARUSD.
One bearish candlestick pattern matches today's price action, the Black Candle.
ZAR/USD closed below the 50-day moving average at 0.0589 for the first time since May 19th.
The market shows weakness in the short-term (in accordance with its long-term downtrend) with only the medium-term trend still being bullish.
As prices are trading close to July's low at 0.0575, downside momentum might accelerate should the forex pair mark new lows for the month.
Among the 10 market conditions that our pattern recognition engine identified today, the statistics for the Price Action based market condition "Strong Down Move" stand out. Though it is usually interpreted as bearish, it has actually shown to be bullish for ZAR/USD. Out of 253 times, ZARUSD closed higher 54.94% 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 two trading days, showing a win rate of 51.78% with an average market move of 0.02%.