Trade Recommendation: EUR/ZAR

The Euro/South African Rand pair (EUR/ZAR) launched its uptrend in July 2013 when it breached resistance of 13. With a solid base between 8.70 – 13.00, the market soared to as high as 18.91174 in January 2016. In two and half years, the Euro grew by over 45% against the South African Rand. Those who bought the breakout and followed the trend started to take profits. After all, 18 was the target of the rounding bottom reversal pattern on the monthly chart that was triggered when the pair took out resistance of 13.

Faced with heavy selling pressure, EUR/ZAR fell to 13.37818 in March 2017. The higher low inspired a rally that lifted the market to 17.06768 in November 2017. Unfortunately for buyers at that level, the pair could no longer sustain its ascent. It then resumed its drop but interestingly, it appears to be carving another higher low.

Technical analysis reveal that the EUR/ZAR pair is creating a large symmetrical triangle pattern on the monthly chart. This comes after the market generated another higher low of 14.17454 in February 2018. As long as the pair respects the trendline, it has a very good chance of breaking out of the continuation pattern and mount a significant rally.

The strategy is to buy as close to 14.35 as possible. If bulls continue to move according to the trendline, the market will likely contract before exploding upward to our target of 20.00. The process may take more than a year.

Monthly Chart of EUR/ZAR on OANDA

As of this writing, the EUR/ZAR pair is trading at 14.78268 on OANDA.

Summary of Strategy

Buy: As close to 14.35 as possible.

Target: 20

Stop: 14.17454

 

Featured image courtesy of Shutterstock

Kiril is a CFA Charterholder and financial professional with 5+ years of experience in financial writing, analysis and product ownership. He has passed all three CFA exams on first attempt and has a bachelor's degree with a specialty in finance. Kiril’s current focus is on cryptocurrencies and funds, as he does his own crypto research and is a Product Manager at Mitre Media. He also has his personal website, InvestorAcademy.org where he teaches people about the basics of investing. His ultimate goal is to help people with limited knowledge of finance and investments to create investment portfolios easily, and in line with their unique circumstances.