USD/ZAR 1H Chart: Still bullish despite senior channel

The USD/ZAR exchange rate has been bound by two longer-term patterns. The more junior one was formed early in March, and it has guided the pair higher in between the lines of the senior pattern. 

Following a test of the 23.60% Fibonacci retracement and the medium-term channel near 12.20 earlier this week, the US Dollar began appreciating towards the senior channel at 12.80. By mid-Friday, the pair was located slightly below this line. 

Even though technical indicators give mixed signals, their direction does point to further appreciation next week. It seems that the senior channel may break, thus allowing for further advance towards the upper boundary of the medium-term channel near 13.10. The 50.00% Fibo is likewise located there. 

In case the senior channel is breached, the Greenback is still expected to respect the boundaries of this medium pattern.



EUR/NZD 1H Chart: Breakout of pattern

EUR/NZD was trading in a neat ascending channel since early April until the senior channel reached on May 14 halted any attempts to move above the 1.73 mark. The pair has since edged lower and breached the 55-, 100– and 200-hour SMAs. The medium-term channel was likewise surpassed mid-today.

It is likely that the pair still edges lower during the following hours down to the psychological 1.70 mark. However, this support area is very strong, as the weekly S1, the 55-day and 200-period (on 4H chart) SMAs are likewise located there. It means that bears may lack the necessary momentum to dash through this cluster. In case this breakout occurs, the pair is likely to fall even lower and thus gradually approach the senior channel circa 1.67. 

Meanwhile, a bullish reversal near 1.70 would send the Euro for a test of the senior channel and the weekly R2 at 1.73 and maybe even higher up to the 1.76 level.


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