USDZAR Short on Break of Near-term Bear-flag

What’s inside:

  • USDZAR stuck in downward bearish channel on daily
  • Bear-flag ready to break on 4-hr
  • Risk/reward favorable

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USDZAR has been trending lower since it’s blow-off top back in January 2016, and in January of this year it broke an important long-term trend-line dating back to 2011. Following a strong retest of this broken line during April, USDZAR is back at it trending lower in a fairly orderly fashion.

The channel since the May top has kept price pointed squarely lower, and expectations are for this to continue. Today, thus far the pair is turning lower once again from the upper parallel resistance. As long as it stays below the upper parallel there is good reason to maintain a bearish bias.


USDZAR Short on Break of Near-term Bear-flag

Looking at the 4-hr chart, a bear-flag is very near triggering. Upon breaking the bottom-side trend-line we should see momentum gain steam towards lower prices.


USDZAR Short on Break of Near-term Bear-flag

A stop sufficiently above today’s high should be ‘safe’ if the trade is to work out. First up as support are the double-bottoms around the 12.68 level. A break below clears a path towards the March low at 12.307. Beneath the March low lies nothing significant until the lower parallel running back to August, which may, depending on the timing, be in confluence with the 2008 spike-high.

For now, though, the initial target is the March low. If achieved risk/reward will be well above the desired 1:2 ratio.

Trade Criteria

Entry: Break of bear-flag on 4-hr time-frame

Stop: Sufficiently above today’s high, 13.005

Target: Above March low, 12.37

—Written by Paul Robinson, Market Analyst

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