Technical analysis: Rand prepares to break out

Comment on this story

A renewed bout of weakening is taking the rand close to a break-out level against the dollar. As shown, such a break-out will be a signal to sell short the rand again.

Dollar/rand: Monitor for a break-out.

Recommendation: Sell short the rand on a break-out.

Trend: Short and medium term sideways. Long-term rand weakness.


- The dollar/rand is trading in a short-term channel (lines 2 and 3). The odds favour an upside break-out of this channel, that is, for the rand to weaken.

- Sell short the rand (buy the dollar) on a closing price above line 3 (R10.81 – spot price).

- If that break-out occurs, it will set up a minimum target of R11.12, based on the height of channel 2-3 projected up.

- But if the rand weakens back to line 1 first (R10.50), sell short the rand there.

- In the unlikely event of a break-down below lines 1 and 2 (R10.47), it will point to R10.39, and maybe further (stronger).

- For shorting a close above line 3 (10.81), the stop will be a close below R10.60. And if shorting the rand off line 1, the stop will be a close below R10.46.

* Colin Abrams is an independent technical analyst. To subscribe to more recommendations by the author, or attend his courses, please go to

sign up

Comment Guidelines

  1. Please read our comment guidelines.
  2. Login and register, if you haven’ t already.
  3. Write your comment in the block below and click (Post As)
  4. Has a comment offended you? Hover your mouse over the comment and wait until a small triangle appears on the right-hand side. Click triangle () and select "Flag as inappropriate". Our moderators will take action if need be.

  5. Verified email addresses: All users on Independent Media news sites are now required to have a verified email address before being allowed to comment on articles. You are only required to verify your email address once to have full access to commenting on articles. For more information please read our comment guidelines