In the end of July, USD/ZAR moved sharply to the upside, reaching the levels last seen in September 2018. But after finding good resistance near the 15.4644 barrier, the pair reversed and moved back down again. The slide got held near the 15.0805 zone, from which the rate rebounded and pushed a bit higher. Then, USD/ZAR almost managed to reach the 15.4644 high again, but fell shy of a few pips from doing that, and reversed to the downside one more time. At the time of the analysis, the picture that we are seeing on the 4-hour chart could be, either a possible range, or a potential double top formation. But before we could assume the second, we need to see a break of the “neckline”, at 10.0805. Only then we will get comfortable with further declines. For now, we will consider the current structure as a range and remain somewhat neutral.
As mentioned above, in order to shift our short-term view to the downside, we need to see a clear break below the lower side of the range, at 15.0805, which may then open the door to some further declines. At the same time, the break could confirm the idea of a possible double top formation and the rate may slide to the next potential support area, at 14.9607, which is the low of August 8th. If the selling doesn’t stop there, a break of that obstacle may pull the pair to the 14.8187 level, marked by the low of August 7th.
Alternatively, if the rate pushes higher towards the upper side of the aforementioned range, we will stay neutral for a while. In order to start examining higher levels, we need to see a break of the upper side of the range, at 15.4644, and only then we will aim for the 15.5368 barrier, which is the high of September 6th, 2018. Initially, USD/ZAR might stall there, or even correct back down a bit. But if the pair remains above the upper side of the range, the bulls could run back into the field and send USD/ZAR beyond the 15.5368 hurdle and target the 15.6950 level, marked by the highest point of 2018, reached on September 5th of that year.
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