USD/ZAR, 1H
Long or Short: Long
Entry Point: 8.1170
Stop Loss: 8.0000
Profit Target/s: 8.7500
Reward-to-risk Ratio: 6:1
Risk percentage: 2%
Indicators used: Fundamental
Trade Rationale:
NOTE: I am using the Big E indicator on the chart, thus the candles are somewhat different from normal Japanese candlesticks.
Technical: The price has declined late on Friday evening probably due to profit-taking, and has remained in line with the 38.2 fibonacci level. The stochastic is entering the oversold zone and similarly the TDI is below 50 and will in all likelihood cut back through the red TDI line below 50.
Fundamental: Given the current economic climate and global unrest, funds invested in emerging economies, and in particular South Africa, are increasingly being withdrawn and moved to safer economies such as the US. In addition, the ZAR generally tracks the performance of the EUR as well as the Gold price. As our economy is heavily dependent on resource-mining such as gold and platinum, the latest declines in these commodities will inevitably weigh on the economy. Similarly, the Euro region crisis does not seem to have an end in sight, which will further impact the ZAR.
Trade Adjustments: None required. Should the profit target be reached as expected, it is reasonable to anticipate that the upside will continue further throughout the week, with temporary lulls where the price will drop, however these declines will not reduce the price below 8.0000 by any stretch of the imagination.