Another day, another….credit rating downgrade.
Last Friday, Fitch, a credit rating agency, downgraded South Africa’s foreign currency debt due to “the lack of a clear path towards government debt stabilisation as well as the expected impact of the COVID-19 shock on public finances and growth”.
Concerned about the 21-day lockdown imposed by the government to contain the coronavirus outbreak, Fitch forecast South Africa’s gross domestic product (GDP) would contract 3.8% in 2020.
Due to the news, the South African rand weakened against the U.S. dollar.
Let’s take a look and see how USD/ZAR did last week.
Using MarketMilk™, we can quickly see how USD/ZAR has performed:
Not only is USD/ZAR in the green last week, but it’s also been performing well over the past month, 3 months, 6 months and 12 months. Talk about strong absolute momentum!
On the weekly (1W) chart, we can see that last week’s candle was super strong. Almost a marubozu candlestick. 💪
USD/ZAR traded upward throughout the week and closed near its high.The currency pair broke through 18.000 AND 19.000, reaching a high of 19.0831 but closed for the week at 19.0056.
This is an ALL-TIME HIGH!
You can see this also in MarketMilk™ by looking at USD/ZAR’s trading ranges:
Notice how USD/ZAR is trading at its highs in almost every timeframe.
With USD/ZAR managing to close above 19.0000, I see further upside.
Let’s drill down to the daily (1D) chart...
Here, you can really see the daily march upward last week, with Friday showing really strong bullish strength.
To protect some more profits, I’m going to move my stop again.
In my previous trade update, I had moved it upward to 17.1500.
I’ve now moved it to 17.6100.
My entry was 16.55000, which means I’ve now locked in 10,600 pips or a 6.4% gain (17.6100 – 16.55000).
Btw, I made an error in my previous trade update and mistyped my locked- in gains.
It was actually 6,000 pips not “16,725 pips”. 🤦Sorry, it was a fat-hoof error. 😬
As a hippo, it’s difficult typing on a keyboard with huge hooves. I’m trying my best. 🦛
Let’s see if the South African rand will weaken to 20 against the U.S. dollar this week!
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