GBP/ZAR Price Forecast: Early-warning signs the short-term trend may reverse

GBP/ZAR is giving signs and omens of a possible change in the near-term trend.
These include a possible reversal pattern and the RSI moving out of oversold territory.

Joaquin Monfort FXStreet

GBP/ZAR has formed a temporary bottom after a steep sell-off. The pair has been steadily rising back up during the last 4-hour period (see chart below) and has now almost completely regained the lost ground from the previous, red down candle.

GBP/ZAR 4-hour Chart

Assuming the current period closes at the same or a higher level as it is now, it will have formed a bullish reversal pattern called a Two-Bar reversal (green rectangle on chart).

Such a pattern suggests a possible reversal of the short-term trend. That said, it is still too early to be confident such a reversal will take place – it is merely a warning sign that the trend may be about to change.

Accompanying the formation of the pattern is the Relative Strength Index (RSI) momentum indicator moving out of oversold levels (blue-shaded circle). This is a buy signal and could be another warning sign the downtrend is reaching a conclusion.

Author

Joaquin Monfort

FXStreet

Joaquin Monfort is a financial writer and analyst with over 10 years experience writing about financial markets and alt data. He holds a degree in Anthropology from London University and a Diploma in Technical analysis.

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