Looking at the 4-hour chart of USD/ZAR, we can see that the pair is on a move lower, potentially aiming for its short-term upside support line taken from the low of April 10th. Today, the rate broke below both, the 14.274 support area and at the 200 EMA. In our view, we may see a small correction to the upside, before another leg of selling.
The pair already tested its key support area at 14.175, which previously acted as resistance and held the rate down on April 22nd. Given that USD/ZAR looks quite oversold on shorter timeframes, we may get a small rebound, where the pair could travel closer towards the 14.274 zone. But, if the bulls are not able to drive the pair above that zone, the bears could quickly step in again and push the rate lower. If the 14.175 obstacle fails to withstand the bear-pressure this time, a further move down may test the area between the 14.100 and 14.117 levels, or the previously discussed upside support line.
Our oscillators, the RSI and the MACD, detect downside momentum and support that the bears may step in again soon. The RSI is below 50 and could be on a move further down. The MACD is below zero and its trigger line, and also points lower.
Alternatively, in order to get comfortable with the upside again, we would need to see a push back above, not only the 14.274 hurdle, but also above the 14.375 area, marked by today’s high. This way, we could start examining slightly higher levels, which were tested this week. The next possible resistance could be seen near the 14.466 obstacle, a break of which may lead USD/ZAR to the 14.535 barrier, marked by the high of this week.
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