A week which started so well for the Rand, had a mid-week collapse, and then gained most of it back again.
On the back of escaping Moody's and Finch's #JunkStatus downgrade on the previous Friday, the Rand had made some excellent progress for the first few hours of the week.
However... after that, things went a little bit flat, as the Rand lost all that it had gained, and then some more on top of that...
...but it was another week of important events, and Friday was where it all really came to a head, and on the back of S&P giving SA one more reprieve, the Rand came firing back!
So follow along, and let us take a look at how it all played out...
How It Happened (28 Nov - 2 Dec 2016) |
Monday morning - some positivity in the markets after Friday's winnings, and a chance at some good movement at the start of the week.
Our forecast (see below - click to enlarge) agreed with that feeling, and as we saw the Rand trading at 13.94 to the Dollar, it was expected to gain some good ground in the first half of the week.
Our forecast showed a high probability of the Rand moving into the R13.91-13.65 area, before it would then bottom out and beginning pushing back up again.
Click to enlargeAnd the markets did not stand on ceremony before following our forecasts...
The Rand pulled off some excellent moves throughout the day, despite some consolidation around midday...
...and then in the afternoon, the Rand really got cracking! It pushed a quick 20 cent strengthening, just in the last few hours of the business day, taking it to a low of R13.69...
And that brought some real positivity to the markets. People believed that things were moving in the right direction, as for a short while it looked as the Rand was on the right track, and Zuma was in the process of being booted out by the ANC.
But...
...being South Africa, it all changed before you could blink.
Tuesday brought different news. Bad news.
The ANC held a media briefing to clarify what all was actually going on with Zuma and his supposed ejection from the presidency... and unfortunately, he had wriggled out of the whole thing...once again.
This was not good news for SA or for the Rand, and it took the hit pretty hard, steamrolling over all the good work which had been done on Monday.
By lunch time...
...the Rand was back over R14/$...!
What a day - one of those ones which just changes the sentiment in a flash.
Thankfully for our subscribers, they had been expecting this since first thing on Monday morning, when our forecast arrived... how crucial could this have been to you and your business, had you received that report?
Wednesday morning had a very different feel to it, then the past few days...
The Rand had thankfully done a bit of a correction off of the moves from Tuesday and was sitting at a more manageable R13.90 to the Dollar on Wednesday morning.
But with all hope of the incumbent president being removed dashed, and with growing fears over S&P's possible downgrade taking its toll, sentiment pushed the market to close off the business day close to R14.10/$.
We headed into Thursday, which turned out to be a bit of an up and down day of indecision, as the Rand moved but ended up only really tracking sideways more than anything else,. It tracked down as far as 13.93, but then punched up to around 14.15 to the Dollar...
All eyes were clearly on Friday, to see what it would bring as everyone waiting anticipatively, not just for the S&P's rating, but also the US Non-Farm Payrolls - the biggest trigger event of the month
And so Friday dawned...
...and the Rand began around R14.05. A fair start, but no indications where to from here...
Firstly, in the couple of hours during the morning, the Rand weakened to its worst level of the week at R14.16/$... and then just began to fall away after that.
Despite all speculation, expectation and worry, the Rand began to strengthen against the tide.
By late afternoon, it was trading under 14 to the Dollar, and not showing any signs of stopping just yet...! For once the Rand had come out tops on the Non-Farm Payrolls!
And after the close of business, it kept going down to the low R13.90s... all eyes still on S&P's to see what they would do...
And finally... the news arrived:
SA had gotten a reprieve - S&P had held off #JunkStatus, but the long term outlook was still a definitively negative one
And wow, did the Rand react to that!
The chart to the left shows it better than anything else, as the Rand first spiked up to 14.04 before plunging below 13.80.
What a whirlwind week.
Monday had started off at top speed in a positive direction, then it had all changed on Tuesday, and then it changed again on Friday!
The net result - surprising 22c gain against the Dollar for the week
The Week Ahead (5-9 Dec 2016) |
Well, the sentiment is certainly a bit more positive with #JunkStatus averted for another 6 months, but the risks still abound.
We are heading into another December, and we all know what happened last year... So one needs to keep a close eye as to how things do play out, because it can all change in the twinkling of an eye...
So, how do we keep on the right side of the market?
By relying on what the market is telling us about where sentiment is likely to take it through the unfolding chart patterns. Which is what Elliott Wave is all about - analysing the human behaviour in financial markets.
It is not a perfect system, but the fact is that it IS better than going by our "gutfeel". There could not be a more dangerous system to use than going by what you feel is going to happen.
So when we are unsure of the coming few weeks - we look at the waves and see how the days are actually going to play out, instead of playing the guessing game...
When you subscribe, we give you roadmap as to where the market is likely to head for the coming days, weeks, months and years, using a system with a track record proven over a period of more than 10 years.
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To your success~
James Paynter
