- USDZAR extended the recent bearish break below the 16.90 strong horizontal support.
- The formation of a downward sloping channel points to a well-established bearish trend.
- Oversold conditions on hourly charts helped limit further losses, only for the time being.
- The next relevant bearish target could be June swing lows ahead of the 16.00 handle.
- Only a sustained move beyond the 17.00 hurdle will negate the near-term bearish bias.
It’s Throwback Thursday and we look back to our USDZAR bearish call initiated on June 8. The pair extended its rejection slide from a resistance marked by the top end of a descending channel and broke through the 16.90 strong horizontal support. The subsequent fall below the 50% Fibonacci level of the 13.93-19.35 strong move up dragged the pair to over one-month lows this Wednesday.
Meanwhile, technical indicators on the daily chart are yet to flash over-stretched conditions and support prospects for further weakness. However, oversold RSI on hourly charts might help bulls to defend the trend-channel support, at least for the time being. Nevertheless, the pair remains vulnerable to slide further towards June monthly swing lows, around the 16.35-30 region, before eventually dropping to the 16.00 handle. The latter coincides with the 61.8% Fibo. level. A convincing breakthrough will mark a fresh bearish breakdown and set the stage for an extension of the ongoing depreciating move.
On the flip side, a sustained recovery back above 50% Fibo. level, around the 16.65 region, might prompt a short-covering move back towards the 16.90 horizontal resistance. Any further gains are likely to remain capped near the trend-channel resistance, currently near the 17.00 mark, which if cleared decisively will negate the near-term bearish outlook.