But...why did the Rand strengthen?

As per popular belief, the Rand went rushing onwards in the first half of this week. It weakened significantly, moving into the R13.90s at one stage...

This was on the back of another downgrade - this time from Fitch ratings agency - late on Friday afternoon.

Throughout the week, protests raged on. Calls for Zuma's head continued, but to no avail.

And then, with all hope looking as if it was lost, and with the Rand at its worst level in 3 months...

...the market turned!

Why?

How?

Surely there was no reason for it to strengthen?

Against all odds, against all news, against all politics, the market acted seemingly on its own accord.

Leaving headlines and articles to read:

And:

So...what had happened?

Just another classic case of getting caught by what gut-feel tells you...

...read on to understand more!

When the sun rose on Monday morning, the sentiment was at a rotten level.

And that was to be expected.

The Rand had had a seriously rotten previous week. Rounded off by another credit ratings agency taking aim at South Africa and pulling the trigger.

S&P and Fitch had now both dealt South Africa body blows of #JunkStatus.

Many were of the opinion, that this was only going to get worse from here, and this is the best the Rand will ever be.

Well...lets see how the week panned out.

It started with the market at a ripe level of R13.80 at 8am. A 150c bump up from where it sat just 2 weeks ago...!

Next up was our forecast for the USDZAR - and a very important one at that.
The updated outlook showed the Rand at R13.8422, and the count indicated the Rand was topping out in the next few days.

The target area was R13.77-14.18...a big target area, as the wave count had a few variables, and a punch through 14.00 would likely see a test of 14.15.

Now to see what was going to happen...

...was the Rand going to defy all odds as per our forecast?

Or would it listen to the yowls and jeers of the economists who were writing it

Click to enlarge

And for the course of Monday, the market followed general expectation (and our forecast), as it weakened further into our target area.

Minimal news was around, besides the US Fed press conference, but even this was a little inconclusive.

Regardless, the market weakened.

All the way to R13.95 - its worst level for the past 3 months...

Most economists were expecting it to go to R14.50/$ and above...

But late on Monday night, the market reached its peak.

Sentiment was its worst. Protests continued against Zuma but with no apparent effect, as ANC hierachy kept an outwardly valiant support of Zuma (knowing that if his head rolled, theirs would too) and it looked like there was not a stitch of good news.

And yet...the market turned!

It was put down to resistance to Zuma increasing, and the political landscape calming...but frankly, who would really believe that either of these would make any difference to the market?

The Rand had been reeling at R13.95/$. There was no logical reason for it to strengthen.

And yet it did.

Tuesday provided us with some slightly haphazard but consistent strengthening of the market.

It was choppy, but the general trend was downwards, and soon we saw the Rand trading back under R13.85.

A slightly choppy end to the day meant that market started Wednesday morning trading at R13.80 to the greenback...now to see if it followed our forecast and confirmed the topping out.

Where to next?

In a economist-shocking dash, the Rand gained almost 20c during the business hours of Wednesday!

What could possibly have caused this?!

Perhaps Trump talking down the Dollar saying "I think our dollar is getting too strong"?

Who knows...and what difference does it make anyway as to why it did?

In the late hours of Wednesday evening, the market had even more gas in the tank, and by midnight was trading below R13.50/$!

Persons were left bewildered, filled with questions. Headlines of news articles complained of confusion and shock.

Yet all that mattered to us was that the Rand had topped out perfectly as per our forecast.

As confusion reigned in the financial world, any one of our subscribers who took action on Monday's forecast, could sit back and relax as they had made the right call, profiting from the 2.7% Rand strengthening

We were due on Thursday for our next forecast, which we then delivered during the course of the morning.

This forecast (see below - click to enlarge) provided us with quite a picture for the coming few days...

The Rand was expected to retrace briefly after its period of magnificent strengthening. But once that was done, more Rand strength was on the horizon!

Click to enlarge

And as per our forecast, the market did exactly that!

It weakened from its low from Wednesday of R13.41, all the way up to touching R13.60/$...

...just as panic was starting to settle in for some that the past 2 days were just a bit of good luck and all hope was still lost, the market topped out as per our forecast.

Around mid-day, with all eyes already on the long Easter weekend, the USDZAR topped out for the second time, at a shade below R13.60.

And then things turned around fast.

Before the end of the day, the market had made its way to sub R13.40, a full swing from where it had begun the month on the 3rd of April.

So the Rand had sealed off the working week in a far better position to where it had begun - what a great turnaround!

Friday...and thanks to the Easter Holiday where most of the world took a break from their daily duties, the markets enjoyed a quiet and well-deserved break themselves.

The Rand slowly moved to close in the high R13.30s, to round off a pretty successful week.

And a pretty successful week for our forecasts too...

The week ahead does not provide too much in terms of economic events.
In fact, the economic road for the next 5 days is almost as flat as a millpond.

Just a couple of events, here and there.

No chance of any action. Supposedly.

But more often than not, it is at times like these that the markets suddenly move off a generally unexpected trigger.

Which proves once again that watching for the triggers (news and events) will never help. It is knowing where the market is likely to head in time and price that is important - the trigger will come when these line up.

Sound complex?

It is a short email sequence which will open your eyes and give you a new understanding of forex markets.

I think it could answer a lot of your questions.

I woud love to hear some feedback.

Best regards,

James