I wanted to show EURZAR 4 hour chart in order to share what is brewing there.
It is more than obvious that our Rand is getting stronger against EURO as there is visible trend line which started around 20. November 2009. This trend line was tested at least nine times. In addition, there is horizontal resistance in the region of 10.75.
What is not so good (or maybe it is, depending on which side of import/export group you are) is falling wedge that started to form early this year. It is still early to look for upside break up, but falling wedge is reversing pattern and can lead to upside break on this EURZAR chart. Way to measure target is to take widest part of wedge and project it upside from breakout point. There are about 50 points (or 5%) in falling wedge shown on chart.
Falling wedge can be, as well, continuation pattern so watch for that one.
This is what Thomas N. Bulkowski’s, author of Encyclopedia of Chart Patterns, says about it:
“The falling wedge is a very poor performer as far as bullish chart patterns go. The break even failure rate is high and the average rise is low. The only variation that works well is a downward breakout in a bear market.”
Trade with trend!