FX & FI Technicals
13 September 2021
Dollar/Rand Weekly Close
How the market can change in a few weeks and just how the winds of change have blown through this chart are truly incredible.
I have drawn so many lines on this chart some of you may be more confused than Handre Pollard with kicking tee, but these lines all have significance as I am trying and hopefully not failing in finding the road map to El Dorado.
The chart has failed to the upside, but the ranges are MASSIVE and there is a possibility that we have another leg higher to the R15.86 level, but this has a low probability, while the much bigger H&S formation seems more likely at present and would have a target at R11.77.
I know most of you are saying that can never happen etc and all I can say to that is we have seen negative crude oil, Apple trading over $2T market cap, a 2 week lock down turned into 500 days and the most powerful western nation in history voting in a senile old hack that can’t remember what day of the week it is, so anything is possible and mainly because we think it cant be.
As it stands I still recommend “guerrilla warfare” trading, and I would not hold onto a position for more than R0.30 as the ranges are huge.
The counter intuitiveness of the strong ZAR view is based on a weak economy devoid of imports to offset export and hence we find ourselves here.
In closing not much has changed from last week although I feel this week will see the start of a relief rally and should we see the unlikely move to R15.80 + I would sell the Dollar there or at least but puts as all the USD liquidity does not seem to be leaving us soon.
Keep you eye on US CPI out tomorrow, don’t ask me what it means as the market feels like it has been 12 rounds with a 22 year old Mike Tyson, nothing makes sense anymore.
I will leave you with this thought, maybe none of us are trading FX, commodities or financials etc, maybe we are all just trading a digital asset with a different name!
Dollar/Rand Daily Candle
With this chart making a decent inverted H&S, Scenario #2 put out 2 weeks back is still on the cards.
Only the short time frames and formations they make along with the speed off the correction etc will confirm a move to R15.80 + or a failure before then.
I promise to ring the bell before I get clocked!
Scenario #2.
The current formation is an irregular flat bear correction that trades back to the R14.20’s, then trades up hard and fast to print between R15.70 – R15.86 to complete the correction while getting everyone and their dog long USD, only to collapse and come down to test the yearly lows and possibly print as low as R11.50.
Both scenarios will have one wondering because after the ferocity of last week’s fall, there is very little confidence in this chart.
Only a daily close over R15.62 would negate scenario #2.
As with the weekly chart, I would not hold any position now for more than R0.30.
Please don’t wipe yourself out as there will still be plenty of opportunities to come before year-end.
Dollar/Rand 240 min Candle
There is little to say here other than we look to be making a ST bottom, but will need a close over R14.36 to confirm.
There is decent support from R14.10 & R14.00.
I can see no trade here worth taking and would strongly advise staying out until further notice.
Euro/USD Weekly Close
The $1.16 level is in line with the 144 week EMA and holding tight.
I still like a move higher for this chart but with US CPI out tomorrow we might see another move lower 1st toward the $1.1650 level before going higher.
The general view is now long the EURO until we have a daily close under $1.16!
US Dollar Index Weekly Candle
I hate to say it, there appears to be a very decent H&S developing and the DXY now appears to be headed lower before it goes higher in line with the white line road map and off the back of the Euro.
However a print over 97.00 would still see the lows in place and a move well over 107.00!
SA Government Bond 30 Year Yield Daily Close
#No Change in Commentary
This 10.30% level is sticky as hell, but if it does not hold, then there will still be a decent amount of downside in this chart over the next 12 months.
The ending diagonal formation will be off the table under 10.20%, and right now, I must confess that 9.22% looks very much on the charts.
Having said all of the above, don’t panic!
The chart is now oversold but can continue lower before kicking, but overall, I would expect a kickback to 10.90% before printing the 9.22%, so you should have time, at least I hope so! – ‘I truly hope this ages well.’
US Government Bond 30 Year Yield Weekly Close
#No Change in commentary.
I would look at buying a move back to 1.90% – 1.80% that will have upside targets from 2.58% – 2.71%.
Use an SL under 1.70%.
Please note that only a weekly close of over 3.50% will confirm that the trend has been broken.
As for now the downtrend is still intact!