As the bad weather closes in expect another tough week for the Rand.

A difficult week for the Rand last week. As the severe cold front closes in on most of South Africa, we expect another difficult week of trading for the Rand.

USD/ZAR is currently trading around 13.75 this morning (05:30 AM). A daily close above 13.85 will set the pair up for a challenge on R 14.00 to the US Dollar. Looking at the 4-hourly this morning we are once again trading right off the lower support line, suggesting we’ll see higher levels this morning. The trend at this stage is still very much upward. Our best short term buying opportunity on the ZAR is R 13,40 but only if we see a firm break of the lower support line. Until that happens R 13,75 is your level.

Scrolling out to the daily graph, its clear to see we are hitting resistance at R 13,75-76, these are levels that go all the way back to October and December last year. The danger with the hourly or 4-hourly graphs is that you’re looking at the market from a very concentrated view point. From this vantage point it’s incredibly difficult to imagine there will be any opportunity in the market for better buying levels. Scroll out to the long-term picture and you’re able to look at the market from a completely different perspective. The market will instinctively want to track back to the long term support its just a question of how long that will take.

For now, a close above R 13,85 will put us back on target to test and potentially break R 14,00 to the US Dollar. A break of R 14,00 should present initial resistance at around R14,03 which is in line with the previous two short term highs we have set. That being said, 3 consecutive tests on an upward line and we could easily see a firm break through these levels. The market is looking to set a new high. We’ll re-evaluate market conditions when this happens.

A break of the bottom support line (top graph) and we’ll be looking for those buying opportunities around R 13.40. This is your initial target level based on current retracement indicators and previous support levels. Considering we’re currently on the short-term support line already this morning, it looks unlikely, but we’ll know soon enough if a break here is a realistic or likely scenario.

Don’t be fooled, at this stage, the trend is up. Importers should be carefully considering their timescales when looking for better buying opportunities and managing risk.