- USD/ZAR gained some traction on Thursday and staged a modest bounce from over one-month lows.
- The technical set-up still seems tilted in favour of bears and supports prospects for further weakness.
- Hence, any subsequent move up might be seen as an opportunity to initiate fresh bearish positions.
The USD/ZAR pair edged higher through the early part of the trading action on Thursday and recovered a part of the previous day’s slide to over one-month lows.
The pair stalled its recent bearish trajectory near mid-16.00s, just ahead of a support marked by the lower end of a three-week-old descending channel. Extremely oversold RSI on the 1-hourly chart prompted some short-covering move amid a modest pickup in the USD demand.
Meanwhile, technical indicators on 4-hourly/daily charts maintained their bearish bias and support prospects for additional declines. Hence, any subsequent move up might still be seen as a selling opportunity and fizzle out rather quickly near the 16.70-75 region.
That said, the pair might still build on the recovery and aim back towards challenging the trend-channel hurdle near the 17.00 mark. A convincing breakthrough the mentioned barrier will negate any near-term bearish bias and set the stage for additional gains.
On the flip side, the trend-channel support, around the 16.50-45 region, might continue to protect the immediate downside. Some follow-through selling might turn the pair vulnerable to break below June swing lows, around the 16.35-30 area, and aim to test the 16.00 mark.
USD/ZAR 4-hourly chart
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Technical levels to watch
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