USDZAR Breaks Away from Descending Bias

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USDZAR recently witnessed a breakout from the long-term descending channel that engulfed prices for most of Q4.

Multi-month lows ensued for the currency pair until a break away from the mean saw a break in the top channel. The move past $14.82, which is a confluence of the base and conversion lines of the Ichimoku indicator, meant a significant step for the bias remaining to the upside.

However, the strong hidden bearish divergence could come into play if prices cannot move past the top border of the cloud.

Currently, resistance at the specified area remains a concern for bulls if prices will remain above the $15 handle.

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An intra-day perspective shows a slight consolidation after prices firmly moved away from the Ichimoku cloud. The recent bullish divergence noted on the momentum indicator propelled prices to weekly highs.

We now wait to see if prices can hold above the 23.6% of the 14.50/15.14 upside Fibonacci leg for further progression.

However, any sign of a reversal will first need a move through the said level, with the 38.2% and the 50% lying in wait and the latter being a confluence of the long-term base and conversion lines.

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