BRICS currencies movement for the week – 27 December 2019

Rand powering ahead this week, dropping below R14/USD for the first time since July this year. This was mainly due to some USD weakness, with the ZAR moving in line with most BRIC currencies.
This bring the total gain for the ZAR against the USD to 2.2% for 2019. Hands up who would’ve predicted that at the beginning of 2019?

#BRICS currency/USD movements for this week:

Brazil +1.4%
Russia +0.2%
India -0.5%
China +0.2%
South Africa +1.4%

Euro/USD +0.9%

Technically, with the Rand breaking the R14 level, it definitely made its intentions clear. It officially broke the R14.15 support and moved even further away from the longer-term Symmetrical Triangle support line. The Rand/USD is still trading below both the 50-day and 200-day moving averages, which are both now both sloping downward (the MA). This makes the trend definitely look a lot healthier.

The USDZAR now finds itself in EXTREME OVERSOLD (overbought Rand) according to its 14-day Relative Strength Index (RSI). This would be the first time since 30 January 2019 where the RSI dropped below 30, which subsequently saw the Rand losing some ground (see red arrows in RSI graph). We could therefore see the Rand taking a bit of a breather around current levels.

Should we see some profit taking and the ZAR move back into the Symmetrical Triangle, could see the Rand seeking resistance back at R14.50 with the 200-day moving average (R14.59) being next stop. A break and close above these levels, could most probably test the 50-day moving average (R14.64), with the top of Symmetrical Triangle at R15 being a very strong and important resistance level. Any traders should watch this level VERY closely.

The 50-day moving average is still getting closer and closer to breaking point (R14.64 vs R14.59). It is not only downward sloping (as mentioned a positive signal for the Rand) but edging ever closer to the 200-day moving average. A “Death Cross” (Golden Cross if you’re looking from a Rand or ZARUSD point of views), could see the Rand’s outlook for 2020 being a lot more positive.

My call for this coming week is exactly the same as last week – I still maintain my longer-term (positive) stance on the Rand. It also still seems like it want to go and test the medium-term target of R13.85, but being extremely oversold, could see us take a breather (sideways) this coming week. The trend is still very much our friend and do I therefore remain neutral for this coming week.

This will be my final BRICS Currencies update for 2019 - HAPPY NEW YEAR EVERYONE!!