Dollar/Rand at Critical Juncture

19 August 2015

The Rand has pushed higher the past few days, threatening a test of R13.00 to the Dollar...


We are now at a critical juncture at current levels, with the Rand having entered a cluster of resistance levels, based on channel lines and Fibonacci ratios.


Below is a weekly chart of the Dollar Rand since 2001 with some of these key levels shown:

Click to enlarge
We have a possible target area for completion of the current move off the 2011 low (marked 'C') using Fibonacci relationships as well as some trendline analysis, as follows:

• A 14.6% extension (derived from multiplying 61.8% by itself 4 times) of Wave B (from Dec 2004 low to Oct 2008 high) gives us a price target of 12.7747
• A 100% projection of this same wave price movement from the start of Wave C in March 2001 gives us a price target of 12.8050
• A 61.8 extension of the move from start of Wave C to the end of Wave 3 of III (Aug 2013) gives us a price target of 12.9561
• Using trendline analysis by extending a line joining the the high of Wave III and Mar 2015, this gives us a resistance level at a shade under 13.0000.
• Using channel analysis, if we draw a line from B that is parallel to a line joining points A and C, we get a resistance level just under 12.9000

The above give us a price cluster in the 10.77 to to 13.00 area, which the Rand has already entered, having made a high of 12.9700 on Tuesday and retested this level late this (Wednesday) afternoon.

This is a strong confluence of resistance, and therefore provides a likely area for a topping out/reversal, or at least some retracement/consolidation.

The patterns that develop over the next few trading days will give us a good idea as to whether the market has topped out in this area, or whether we can expect more Dollar strength, with the next Fibonacci cluster being around 13.1900-13.2600, followed by around 13.76-13.85

The above is the kind of background analysis that we do behind the scenes to provide us with the price targets we have had in our recent forecasts for our clients.

As I said in my last post, this is not the time to be flying blind or being influenced by your anxieties and emotions (which are your worst enemy). Or looking to mainstream news, economists or bankers for direction.

What you need is an objective view that will ensure you are on the right side of the market...

...as another good client, Doug Harris, wrote to me recently:
That is an incredible saving to make.

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But that is them - my concern is you if you are reading this...and stressing over where the Rand is heading...

...worrying about exchanging when you shouldn't, or not doing so when you should.

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To your success~

James Paynter

P.S. As always, would appreciate your comments below.