I'm going to start this week off (for those who don't like reading beyond the first paragraph) that in the past week we have broken above all major resistance lines and the tide has finally turned within the major trend of USDZAR. Firstly, we have finally broken above the 200 Day Moving Average at 6.97 on the third attempt. Both previous attempts at the 200 day MA have been met with aggressive selling sending us down to 6.43 and 6.70 respectively. This was a major hurdle to clear on the topside and the market has finally done it. In the markets there is a common belief that when price is above its 200 day MA then it's in a bull trend, and vice versa.USDZAR has been trading below this level for the past 5 months and the mere fact that we touched it twice previously made it a key topside level. It's also great to watch the intraday price action on these moves as they clearly show it as a big level - as soon as 6.97 broke we quickly jumped to 6.08 (which was the next big resistance level) where price stopped for most of the day finding more sellers. We have subsequently broken through this resistance this morning and in the same way that price ran up quickly on the break above 6.97, we have seen price jump up to 7.15 on this break as well.
 
These moves (and breaks above key resistance levels) now finally align the fundamental, macro and technical pictures towards a bullish USDZAR move (or weakening of the ZAR over the next 6-12 months). This is good news for those wanting a weaker ZAR as this alignment of interests between the fundamental and technical pitcures sets us up for a powerful and sustained move weaker on the ZAR.
 
For the past few weeks I've been championing the case for a weaker ZAR but unfortunately my timing has been off slighty. It seems that sometimes a public platform is needed to catch the attention of the market and get them to listen. On Monday last week the following article was published on News24:
 
Rand may come under pressure - Chris Hart
 
- There is potential for severe pressure on the rand due to a high current account deficit combined with slow
growth and an uncertain political climate
- current account deficit at 8.1% of GDP is one of the world's biggest, and this has potential repercussions when combined with slow growth
- He indicates that the Asian crisis in mid-1997 proved just how lethal a cocktail this can be
- Hart questions whether SA's growth levels are high enough to continually attract investors
......and all this from a guy who actually was my science teacher in high school! So it's pretty funny that the day after this story is published the ZAR starts getting sold off aggressively once again confirming my belief that (a) people are unable to think for themselves (b) people are unable to foresee anything further than tomorrow (c) people are generally blind to the truth. I've been stating the above for yonks but it's only once these thoughts are conveyed through a public platform that everyone takes notice, nodding their heads in agreement.

Anyway, enough ranting. Last week I also said that I'd completely missed the boat on the downmove and it was better not to chase the move down as it was gone and the opportunity had been missed. Now what I'm saying is 'Hop on and enjoy the ride'. We could go seriously high here (weaker ZAR) over the next few months (bear in mind markets don't move in straight lines) but the boat is leaving harbour.

All that I'm looking for this week is for price to at least hold current level with my points of support sitting at 7.07-7.09 and 6.97 (all former big resistance levels). The topside is open up to the 7.50's and even then I would suspect we are on course for a test and break of this level within the major trend. That's a pretty big call within the long term but that is the 'potential' scenario that seems to be playing out in the markets at the moment IF the abovementioned support levels are able to hold.

Good luck for the week ahead!

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