USD/ZAR Price Analysis: Struggles near 1-month lows, around 16.70-75 region
- USD/ZAR edged lower for the fourth consecutive day and dropped to over-month lows on Monday.
- The set-up supports prospects for a slide towards testing short-term descending channel support.
- A subsequent fall might then turn the pair vulnerable to accelerate the fall towards sub-16.00 levels.
- Any attempted recovery move now seems to confront a stiff resistance near the 16.90-17.00 region.
The USD/ZAR pair remained depressed for the fourth consecutive session and dropped to over one-month lows, around the 16.70 region on the first day of a new trading week.
Given last week's rejection slide from the top end of a three-week-old descending trend-channel, a subsequent fall below the 16.90 horizontal support shifted the bias back in favour of bearish traders. This coupled with the fact that oscillators on hourly/daily charts maintained their bearish bias, and are still far from being in the oversold territory, support prospects for further near-term weakness.
Hence, some follow-through slide towards challenging the trend-channel support, around the 16.60 region, remains a distinct possibility. A convincing breakthrough will now set the stage for an extension of the downward trajectory back towards retesting June monthly swing lows, around the 16.35-30 region before the pair eventually drops to sub-16.00 levels or support near the 15.85-75 zone.
On the flip side, any attempted recovery move now seems to confront a stiff resistance and remain capped near the 16.90 support breakpoint. This is closely followed by the trend-channel barrier near the 17.00-17.05 region, which if cleared decisively will negate the near-term bearish outlook, rather prompt some aggressive short-covering move.
USD/ZAR 4-hourly chart
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Technical levels to watch
Author
Haresh Menghani
FXStreet
Haresh Menghani is a detail-oriented professional with 10+ years of extensive experience in analysing the global financial markets.
