BRICS currencies movement for the week – 13 December 2019

I’ve got good news and bad. The good is the Rand/USD breached my weekly target (of R14.50) and ended the week stronger against the USD. The bad news - if I was a short-term trader (which I’m not), with the whole Eskom debacle (Load shedding continued and intensified to Stage 6), my “stop-loss” would have been breached as well. But, all's well that ends well!

So, what was the main driver for the strength in both the Rand and other BRIC currencies? The answer is short and sweet, “TRUMP TWEETED”. On Thursday Trump tweeted the follow: “Getting VERY close to a BIG DEAL with China. They want it, and so do we!” The aftereffect was a BIG movement in both Emerging Market Equities and Currencies.

#BRICS currency/USD movements for this week:

Brazil +0.8%
Russia +1.3%
India +0.7%
China +0.6%
South Africa +0.8%

Euro/USD +0.6%

Technically, the Rand broke a VERY important support level, closing the week below the medium-term Symmetrical Triangle support line. It also broke through the 200-day moving average (R14.59) and traded below the R14.50 support level for a moment yesterday. It could however not close below R14.50.

A break and close below R14.50, should see the USDZAR seek support at R14.15 (next short-term target), with a break below this level bring my medium-term target of R13.85 into play.

Even at the current levels, the USDZAR still don’t find itself at oversold (overbought Rand) according to its 14-day RSI.

Should this be a false break, with a break back into the Symmetrical Triangle, could see the Rand seeking resistance only at the 50-day moving average (R14.78) again, with a break and close above these levels, most probably testing the R15 levels. Next resistance level is R15.13.

Speaking of the devil. The 50-day moving average is getting mighty interesting. It is not only downward sloping (positive signal for the Rand) but edging ever closer to the 200-day moving average. Know it still has some room to play with, but a “Death Cross” (Golden Cross if you’re looking from a Rand or ZARUSD point of views), could see the Rand back on a few global tech-trader’s charts.

My call for this coming week – I still maintain my stance on the Rand, while the positive momentum is still very much in the favour of the Rand. Going to make the trend my friend, which could see us break below R14.50 again this week. Should an actual “positive” US/China deal be announced, could very much see the Rand testing the R14.15 levels.