After hitting its high in mid-August, near the 15.500 mark, USD/ZAR started gradually drifting lower and is once again very close to its key support area, at around the 14.507 level, marked near the lowest points of September and October. At the same time, the pair is still running below its short-term tentative downside resistance line taken from the high of October 31st, and also below its 200-day EMA. That said, in order to get comfortable with further declines, a daily close below the above-mentioned 14.507 zone is needed, hence why we will take a cautiously-bearish approach, at least for now.
If we eventually see a daily close below that 14.507 hurdle, this would confirm a lower low and more sellers could take this as an opportunity to step in and drive the pair lower. We will then target the 14.316 hurdle, marked near the highs of July 26th and 29th, which if broken might clear the path to the 14.089 level, marked by the low of July 31st.
Our oscillators, the RSI and the MACD, are somewhat in support of the downside scenario. The RSI is below 50 and points lower. The MACD is also pointing to the downside, while sitting below zero and its trigger line.
Alternatively, if USD/ZAR moves higher, breaks the previously-mentioned downside line and the rate shifts above the 14.713 barrier, marked by the high of December 2nd, this could clear the path to the 14.865 hurdle, which if fails to withstand the bull pressure and breaks, may allow the pair to rise to the 15.006 level, marked by the high of November 13th.
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