Pound / Rand Rate Breaks Above Some Key Levels and Begins New Uptrend
Image © Pound Sterling Live
- GBP/ZAR breaks above hard ceiling on growth fears
- Probably now in a short-term uptrend
- Strong weekly close could be a game-changer
The Pound-to-South African Rand exchange rate is now at 19.14 and has broken above several key levels ending its sideways trend and setting it on a course to move higher.
Over the last few days the Pound-to-Rand reversed trend and surged after poor South African economic growth figures and the prospect of political meddling in monetary policy hit confidence in the currency.
The 4-hour chart above, which is used to analyse short-term trend dynamics and the outlook for the next 1-5 days, shows how the pair broke cleanly above the key May ‘19 highs and the short-term trendline drawn from the March ‘19 highs.
These are both tough levels of technical resistance and the break above them is a bullish sign. It also suggests the pair has broken out of the rough range it has been in between 18.00 - 19.00 and is set to go higher.
The pair has also formed three sets of higher highs (HH) and lows (HL) on the 4hr chart which is a sign the short-term trend has changed to bullish.
The RSI momentum indicator in the bottom panel has risen into the overbought zone above 70 and this is a bearish sign, however, that the pair may stall and pull-back.
There is a possibility it could correct down back down to the nexus of support at the May highs and major trendline from 2018, at 19.08-10 before going higher.
Eventually, however, we expect it to resume its uptrend and continue up to a target at 19.40, at the March highs. This is achievable during next week.
The daily chart above, which is used to analyse the medium-term trend, and the next 1-4 weeks price action, is showing the pair in the process of breaking above the major trendline from 2018.
It has pierced it but not yet closed above it on a daily basis, which would be a stronger bullish sign. Much depends on the close today (Friday).
If it is above - by which we mean above 19.10 then it will be a very bullish sign for next week; if not, then the pair could stall and start going sideways.
Confirmation of an extension higher would come from a break above Friday’s current highs at 19.27.
A clear break above 19.45 would also indicate a continuation up to the next target at 20.00 reachable within the medium-term 1-4 week timeframe.
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