Rand could appreciate to R5,50/US$

JOHANNESBURG – The price action in recent days confirms the technical view that the rand will appreciate further, with a move below the psychological barrier of six to the US dollar, BoE said yesterday.

“The move below R6,25 validates a triangle formation, in technical terms a formation which increases the probability for a continuation of the trend that was prevailing before the triangle,” said Gregor Krall, technical analyst at BoE Private Clients in a media statement. “Since we have been in a bull trend, the rand is likely to target between R5,75 and R5,50, well below the R6,08 low seen in December last year.”Intervening support for the dollar is likely around R5,93/R5,95 which marked the bottom of the tight range seen in 1999 when volatility was low.The market will probably need a few weeks to digest the move and get used to the stronger levels, but further strength is then forecast to between R5,75 and R5,50, levels last seen in 1998.”Dollar sellers are likely to watch R6,28 and R6,40 as level to re-enter or initiate short positions.The near-term bullish rand view remains valid unless the exchange rate moves above R6,40, and a long-term bearish rand view will only be called for should the rand break above its two-year downtrend and May reactive high at R7,15.”Krall noted that against other currencies, the long-term pivot levels at R7,50 versus the euro and R11,00 versus the pound will be critical in determining future direction.Sustained moves below these key levels are likely to signal that it is not only a weak US dollar effect, but more broad-based rand strength that is at work.- Nampa-Sapa”Since we have been in a bull trend, the rand is likely to target between R5,75 and R5,50, well below the R6,08 low seen in December last year.”Intervening support for the dollar is likely around R5,93/R5,95 which marked the bottom of the tight range seen in 1999 when volatility was low.The market will probably need a few weeks to digest the move and get used to the stronger levels, but further strength is then forecast to between R5,75 and R5,50, levels last seen in 1998.”Dollar sellers are likely to watch R6,28 and R6,40 as level to re-enter or initiate short positions.The near-term bullish rand view remains valid unless the exchange rate moves above R6,40, and a long-term bearish rand view will only be called for should the rand break above its two-year downtrend and May reactive high at R7,15.” Krall noted that against other currencies, the long-term pivot levels at R7,50 versus the euro and R11,00 versus the pound will be critical in determining future direction.Sustained moves below these key levels are likely to signal that it is not only a weak US dollar effect, but more broad-based rand strength that is at work.- Nampa-Sapa