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Pound / Rand Rate Breaks Above Some Key Levels and Begins New Uptrend

South African Rand breaks into 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.

GBP to ZAR four hour

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.

GBP ZAR daily

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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