How to trade a pair of USDZAR - we lift the African economy from its knees
Today we will be transported to faraway and mysterious Africa, namely, to South Africa. It will be about trading in South African rand, represented on Forex as a pair of USDZAR. In addition to South Africa, this currency is in circulation between Namibia and Lesotho. Let's find out what opportunities this very simple trading pair hides, which traders often do not pay attention to at all.
Economy South Africa
The economy of South Africa is basically mining. Near Johannesburg there is the largest gold deposit in the world; copper, coal, manganese and iron ores are also mined.
It was in connection with the extraction of gold and diamonds that the initial dawn of the region took place. Previously, it was a Dutch colony, so now you can find many Dutch dishes there, slightly renamed in the local manner, or using instead of beef, say, antelope meat.
In large cities such as Cape Town and Johannesburg, there are clusters of whites, but they try to intersect with the black population as little as possible. Therefore, if you are an ordinary white guy, then stay away from the black guys from South Africa, otherwise you can lose not only your wallet, but also your life.
In addition to the mining industry, metalworking, mechanical engineering, light industry, and the production of building materials are also developed. Some large companies also collect cars here: BMW, Toyota, Ford. Agriculture is also developed: sugar cane, citrus and subtropical crops are grown.
In general, the South African economy belongs to developing countries, and it is forecasted to grow further, as over time the country develops and moves away from the wild old orders. If such developed countries as America or Germany need to exert themselves strongly (to jump high above their heads) in order to grow, then for developing regions there is still very great scope for growth, which accordingly affects the currency. The interest rate at the moment is 6.75%.
Well, the South African rand, which at the moment is 4.5 rubles, when compared with our currency, appeared not so long ago, and before that the South African pound was in circulation. Actually - the currency appeared simultaneously with the proclamation of the Republic of South Africa and its withdrawal from the British Commonwealth.
The weekly chart shows with the naked eye that the long-term trend of the USDZAR pair is upward, that is, the dollar is growing, and the rand is falling. Nevertheless, in the last two years (since the beginning of 2016) the situation has developed in the opposite direction.
Therefore, it is difficult to give any long-term forecasts here. It is possible that the situation will continue and the pair will continue to fall.
As for swaps, the situation varies greatly from broker to broker. Swap long positions is negative, for short - positive.
If you trade on daily charts, it makes sense to open only short positions. However, points in this currency are very cheap. One point is approximately 7-8 cents when trading 0.1 lot.
Trading time is standard. The most active time is Europe and America. From interesting observations, it can be noted that, as a rule, one orientation is preserved during the day. That is, if at the beginning of the day the pair begins to fall (in the first hours of the European session), then most likely it will continue to fall until the evening, until the middle of the American session. After this comes a lull. Breakout strategies will work well.
Price Action on this pair, according to my observations, does not work very well. At least, pin-bars and doji do not work out very well. In turn, breakdown models, such as the Absorption and the Inner Bar, work out quite well. At the same time, you can enter not only on the breakdown of the mother candle, but also on the breakdown of the inner bar.
I do not observe any clear working out of any round levels, again, the most banal definition of the trend rules here. You can safely use trend lines, their breakdown and rebound from them.
The tool is simple, so the most primitive methods of technical analysis work. The pair resembles what cryptocurrencies are now, where simple strategies work, aimed specifically at the behavior of people (traders), and not at some tricks.
Therefore, Fibo levels work here, which the price respects.
The most volatile USDZAR day is Friday. On this day, the volatility exceeds the average percentage by 15. If we take the average temperature in the hospital, then the day volatility is about 2000 points.
The graph also shows that this value is not distributed evenly. There are days with big movements, but there are more or less calm.
By the hours of the day it is still clear that movements prevail in the European and American sessions.
According to the correlation, there is a strong dependence with USDCHF. Thus, if any signal appeared on USDCHF, then by the same signal you can enter on USDZAR.
There is also an inverse correlation with gold prices. Gold is falling - rand is growing. The nature of the dependence is obvious - South Africa is the largest producer of gold, so gold prices are important for the country's economy. Although gold mining is declining over the years - that is, the country is becoming not so dependent on this indicator.
As for the news - everything is simple here, we look at the news related to the US dollar, since news directly on the news are rather rare. As a rule, these are only some kind of decisions on the interest rate, or some important events, for example, a change of government.
In general, the USDZAR pair is very easy to trade. Negative swaps for long positions may confuse someone, but since the points are very cheap, this does not play any significant role. Breakdown strategies, like the London explosion, show themselves perfectly, since the movement of the pair is quite uniform. Price Action is hardly necessary here, since there is still more focus on the trend. As with cryptocurrencies, Fibonacci levels work great.
Brokers with whom USDZAR is available
- Alpari (ECN Accounts)