On Monday, USD/ZAR finally broke above its medium-term downside resistance line taken from the high of October 2nd. At the same time, the pair remains above its short-term tentative upside support line drawn from the low of January 2nd. Taking all this into account, it seems that the path of least resistance lies further north, hence why we will take a bullish approach, at least in the near term.
A further acceleration to the upside could bring the rate to the 14.8668 barrier, which is the highest point of December. Initially, the pair might get a hold-up around there, or may even be forced to retrace slightly, if the bulls decide to take some profits there. A small move lower could drag USD/ZAR towards the aforementioned upside line, which if remains intact may present an opportunity for the buyers to jump in. If that happens, the rate could rise and target the 14.8668 hurdle again. If this time it fails to withstand the bullish pressure and breaks, this would confirm a forthcoming higher high and may clear the path towards higher areas. We will then consider a possible test of the 15.0065 obstacle, a break of which might send USD/ZAR to the 15.1850 level, marked by the high of December 31st.
Looking at the RSI and the MACD, both are also suggesting that there may be some more upside in the near term. The RSI is above 50 and continues to point upwards. The MACD is above zero and its trigger line, while pointing higher.
Alternatively, if the rate suddenly falls below both the aforementioned upside and downside lines, this could make the bulls worried, especially if the pair slides below the 14.4100 zone, marked by the current low of this week. Such a move might trigger more selling, potentially leading USD/ZAR to the 14.2716 hurdle, or to the 14.1110 area, marked by the low of January 9th. If the selling is still strong, another drop could set the stage for a re-visit of the lowest point of January, at 13.9305.
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