Welcome to our Weekly Rand Review for 7 November 2016, where we take a look at how things unfolded last week and give you our thoughts for the week ahead.
Another difficult week for the Rand...and yet it hit one of it's best levels in quite some time.
This past week will be remembered for 3 things:
- Gordhan's case mysteriously being withdrawn just one day before his hearing
- The Rand strengthening to a 2-month best
- The State Capture report finally being released despite top political figures trying to stop it
Most certainly, a week of controversy and political interference with the country's economy - another week of economic and political pinball.
Let us take a look at the way it all happened, to see if we can find some hints for the coming week .
How It Happened (31-4 Oct/Nov 2016) |
Monday began with the Rand trading in the mid R13.70s. Our forecast (see below - click to enlarge) was of course due, and this was out before 10am on Monday morning, to give our subscribers the outlook for the coming few days.
It showed the rand in a precarious position, with some more downside possibly before we were to move upwards, back toward 14.
What could possibly trigger that downside before we lost ground was unbeknown to us, as the week's outlook looked pretty miserable, when we released this forecast at 09:55am...
Click to enlargeOut of the blue, the news hit us.
At 10am, the NPA called a surprise press conference. No one knew what was happening.
And like a ten ton weight being lifted off South Africa, the NPA withdrew their charges on Gordhan. The court hearing would not go ahead on Wednesday, and the matter was over.
A real shot out of left field as they say, and the Rand rallied on the back of this, moving with our count #2 in a significant strengthening throughout Monday.
By early afternoon, the Rand had already pushed into our target area, as it fell under the R13.60 mark with no sign of stopping. And it did not stop, as it kept going onwards until in the evening, it actually moved right through our target area as it went under R13.50 to the Dollar.
What a turnaround from our start on Monday!
A dash of positivity was back when Tuesday began, and it was time for us to give another forecast, with the market having moved into our as our previous one had been validated already, and the Rand had moved on.
Tuesday's outlook showed us that from the mark of R13.47, we could expect some further strengthening of the Rand in the coming few days (see below - click to enlarge), before we saw it bottoming out.
Click to enlargeTuesday turned out to be a day of slight consolidation, as the Rand reversed slightly against our forecast, and retraced back up over 13.60 to the dollar. It touched 13.67 (ever so close to our invalidation level, but not quite).
It is important to note this - however close the market moves to our target areas and invalidation levels, it makes absolutely no difference at all unless they cross that exact level.
It may be even half a cent off, but if it does not move across that exact mark, then nothing is actually confirmed.
Wednesday...was this going to be our day?
As it turned out, it was.
Just as we feared our forecast may just be invalidated, the market turned...
...and this was surely what our subscribers had been waiting for..
..as we saw the Rand rally to go to its best level since August - hitting a low of R13.31 - bang in the middle of our target area!
Quite some move since Monday morning, where the markets opened closer to R13.80!
On Wednesday, the news also came out regarding the #StateCaptureReport.
The full report was released at 5pm, and this was seen as the impetus for the Rand to bottom out so quickly, and move back over R13.50 throughout the afternoon.
A lot of emotion, controversy and focus was certainly on this, and it could well have triggered the move. However, we just watch the political events, and don't really bother to take much notice of them.
The key is just to watch for (and ride) the waves - Elliott Waves that is 🙂
Thursday was once again our forecast day, as always. This forecast was a crucial one, as the after-effects of Gordhan, State Capture and more were still lingering.
This was not one to be missed, that was for sure!
Our update showed that a low was in place at 13.31 and that some upside movement was expected...
As it turned out, Thursday was a pretty flat day as we more or less saw the Rand track sideways and despite the odd candlestick spiking a little lower or higher, the market kept pretty stable. These are days we seem to get few and far between in this day and age!
But Friday was definitely not going to be the same...
...and so it was not.
With this little line-up of events, it was clear that we would see a couple of fireworks in the afternoon with news out of the US:
The above is a screenshot of our Rand Fundamentals events - a feature available to our premium subscribers. If you are affected by short term movement, insight into these upcoming events could have been of great value to you.
Friday began slowly but as the events drew close, some spikes were seen - the Rand moved back above R13.60/$ with a large amount of momentum possibly sending it further.
Once again, US Non-Farm Payrolls and Trade Balance being the trigger for some Rand movement. They are some of the most sure events for some trigger of movement, generally in the direction of our forecast, which need to be watched out for.
A whirlwind week... But where has it landed us up at?
The Rand traded at 13.58 as at 8 a.m. on Monday morning, off the high of 13.64 achieved on Friday.
Overall, a good week for the Rand, but with plenty of high jinx in between!
The Week Ahead (7-11 Nov 2016) |
Despite the Rand having made its best level in over 2 months, the week ahead is full of risks...
Yes, Gordhan was been let off the hook, but it appears the NPA (read Zuma & cronies) have not backed down altogether - expect some surprises here still!
And with a whole lot of major political figures being implicated in the State Capture report...
...it gives us all an uneasy feeling as to what is coming next!
And then, of course, we have THE event of the year tomorrow...
...US Elections.
What exact effect it will have on markets is still unknown, but this is certainly THE one to watch. The one to worry about.
The emotions are running extremely high, with a more divided populace than has been seen in probably any elections prior.
So how do we go about managing all of the volatility which is likely to become even worse? Once again, ride and watch the Elliott Waves is the only gameplan we actually know that gives us an unbiased, unemotional picture.
Our forecast that was published this morning gave the probable outlook for the coming week, despite all volatility, despite all political interference and despite all assumptions & emotions. And at what level this would be negated.
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To your success~
James Paynter
