From around mid-April, USD/ZAR is getting slowly squeezed, while trading between two lines, a short-term downside resistance one drawn from the high of April 24th, and a short-term upside support line taken from the low of March 31st. As long as the rate remains between those two lines, we will stay neutral.
If the pair pops above the aforementioned downside line and pushes above this week’s current high, at 18.750, that would confirm a forthcoming higher high, which may signal a continuation of the prevailing uptrend. We will then aim for the 18.950 obstacle, a break of which could send USD/ZAR to the high of April 24th, at 19.178. Initially, the pair might stall there temporarily, or even correct a bit lower. However, if the buyers are still feeling more comfortable, they might give the pair another push and lift it above the 19.178 hurdle. If so, the next potential target could be the highest point of April, at 19.336.
Looking at the RSI on our 4-hour chart, it is pointing higher, while balancing slightly above 50. For now, the indicator supports the idea of seeing a bit of upside in the near term. The MACD, on the other hand, keeps us on the neutral side for now, as it is currently running flat and below its trigger line, while floating fractionally above zero. In order to rely more on our indicators, we would prefer to have both oscillators confirming the same direction at the same time.
Alternatively, if the previously-discussed upside line breaks and the rate falls below the 18.167 zone, which is the current low of this week, that may spook the bulls from the field temporarily and allow the bears to dictate the rules for a while. USD/ZAR could then travel to the 18.020 obstacle, a break of which may clear the way to the 17.850 hurdle, marked by the low of April 9th. If the selling doesn’t stop there, the next aim could be at the 17.665 level, which might provide support the same way it did on March 31st.
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