BRICS currencies movement for the week – 17 January 2020

Die Rand moving in-line with most BRIC currencies, with one major difference between the them being that South Africa received a 0.25% interest (repo) rate cut from the SARB this week. So, even with the Rand being a bit softer this week, one can argue that this was mainly due to the rate announcement.

#BRICS currency/USD movements for this week:

Brazil -1.6%
Russia -0.9%
India -0.2%
China +0.9%
South Africa -0.6%

Euro/USD -0.3%

Technically, the Rand still trading below the longer-term Symmetrical Triangle with a short-term Rising Wedge that developed since the lows three weeks ago. We currently find R14.50 as a very strong resistance level for the following reasons:

• Move back into the Symmetrical Triangle;
• Top of the Rising Wedge;
• Current 50-day Moving Average; and
• one of the strongest support levels of 2019.

It is still trading below both the 50-day and 200-day moving averages. The trend of the 200-day MA is still moving upward, which I’m monitoring closely. A downward sloping MA is a healthy trend, while an upward sloping MA, might signal a change in the trend (not so healthy). While the 50-day MA is still sloping downward, it is losing some of it’s early (2020) momentum.

Should weakness persist, the ZAR could move back into the Symmetrical Triangle (at R14.50), which subsequently could see the Rand seek resistance at the 200-day moving average at R14.59. A break and close above these levels, could most probably test the top of Symmetrical Triangle at R14.85, with R15 being an extreme and vital resistance level. Any traders should still watch this level VERY closely.
Should resistance hold this coming week and we see an improvement in the Rand, bottom of the wedge (R14.35) is my first support level, with a break and close below this level bringing the R14.15 support-level back into play.

My call for this coming week is still to hold the line. I still maintain my longer-term (positive) stance on the Rand, with a medium-term target of R13.85. I don’t see any positive news coming out over the shorter term and will, therefore, remain neutral for this coming week, with the most likely trading band being between R14.30 and R14.80.