FX & FI Technicals
24 January 2022
Dollar/Rand Weekly Close
It has been a good five weeks since I updated these charts, and wow, how the landscape has changed and how some time away is terrific for gaining a unique perspective.
After the fear of Omicron and some technical breaks, this chart has eventually shown me its true colours.
Most of you will not like or believe my LT view, but alas, I am not here to appease but only to call it the way I see it, and what I see is R11.50 over the next 17 months.
I am convinced that the ZAR is in a multi-year corrective phase vs. the USD and that from today on, all upward spikes on this chart are well worth a short!
Now before everyone (who believes me) goes selling their house to fund a Dollar short position, be cognitive of the fact that this chart could easily have a leg higher and trade toward the R16.77 level in the coming weeks.
This could easily be attributed to Russia invading the Ukraine or China invading Taiwan or both, which should provide a risk – off environment, causing a quick and painful weakening of the ZAR.
An event of this nature should be seen for exactly what it is, an opporutunity to sell the USD and buy the ZAR.
I will be doing some ad-hoc research on this later in the week to fully explain why I strongly feel that the above view will playout.
Until then, the range is likely to be R14.88 – R15.50 and I would seriously consider owning the bottom of the range!
Dollar/Rand Daily Candle
The chart has traded and tested the MT trend, this combined with being oversold has resulted in a good kick, and although I cannot buy the USD here, I would look to get long sub R15.06 – R14.88 this week should we see a spike down to these levels.
A trade of this nature should be good for a rally of at least R0.80 if not more.
In the bigger picture the greater daily chart fits well into my weekly view.
I want everyone’s theme for 2022 to be PATIENCE, because for what I can see across all markets is that picking our spot will be more important than ever, especially as this could be the year we encounter a wedge of Black Swans.
Dollar/Rand 240 min Candle
Our last trade did not work out as the chart failed miserably at R16.07.
Lucky for us stops losses are there to make sure we live to fight another day and its with this in mind that I propose the following:
Buy USD from R15.06 – R14.88, with stop loss under R14.80.
Trade targets will be R16.06 = 15/1 RR.
This view is based on the fact that I feel the chart is making an ending diagonal.
Euro/USD Weekly Close
The $1.1250 remains MASSIVE support and if she goes, we might print sub $1.07.
In the ST should we see this chart move back over $1.450 – $1.16 I would sell it.
US Dollar Index Weekly Candle
We are still well within the road map and we are long at 95.32 and very patiently waiting for a move back over 100.00 in the coming months.
To say that this is a 5 day game would be an understatement as it’s far move like a 5 test series, so patience is key!
SA Government Bond 30 Year Yield Daily Close
The chart is very range bound and all I can add from here is that the top of the range (11.40%ish) will be an amazing buy as the greater formation is starting to appear more and more like a consolidation for a seriously leg lower.
The chart is also kicking very nicely off over sold levels.
US Government Bond 30 Year Yield Weekly Close
This chart is heading to 3.00% in my opinion.
I would buy any move back the MT trend line!