Rand Review - 30 Jan 2017

Hectic. Worrying. And yet, just as predicted...

All these words are correct in their description of the past week - an exciting story of 5 days of manic moves, as the Rand left most of its followers in the dust while it motored onwards…

So while Trump was causing uproar after uproar in the United States by doing exactly what he said he would, the markets created their own stir on the sidelines.

Our forecasts, though, helped our clients keep on top of this week, as they accurately provided info as to where the markets were going.

Want to see how it all played out?

Keep reading...

All in a rush, it was Monday morning again, and the insecurity of the new week was back with the Rand...

When business opened again at 8am, the market was sitting a tad over R13.50 to the US Dollar, as it strode forward into the new week…

...leaving us to try and decipher from the wave patterns, what exactly the next few days held.

Our forecast (see below - click to enlarge) was still fairly similar to our last one, as it showed the same support level at 13.16, with the expected outlook to be one of Rand strength over the next few days… we now just needed to wait and see how the week played out.

Click to enlarge

And as for Monday, things played out okay.

The markets were calm, but still with a slight strengthening trend.

The only movement of note that there was, was after business hours as from 8-12 on Monday night, the Rand strengthened 10c to R13.46 - but in general, there was a calm feeling to the way it moved…

So… Tuesday morning.

The market opened up around R13.47, and were still calm…

...and it stayed that way, until just after midday, when the tide of calm seemingly went missing…

In just 7 minutes, the Rand strengthened over 10c!

So out of nowhere, the Rand was suddenly touching R13.32 to the Dollar.

In the next couple of hours, the Rand broke below R13.30, to its best level of R13.28/$ for the year of 2017, and its best since November last year, aided by the Reserve Bank announcing it would be keep rates on hold - a plus for the economy.

And, according to the Big Mac Index report by The Economist, it should be a whole lot better than that...

...according to their analytics, the Rand should be trading at R5.20 to the Dollar, over 60% higher in value compared to its current level...

...we do not agree with this one by the way - on a true inflation-adjusted level, the Rand's true value is double this, perhaps a little higher.

As the remainder of Tuesday played out, the Rand consolidated as it often does after a big move, and headed back toward the R13.40 mark…

...but on Wednesday morning, the Rand was back on the move, and continued to move with our forecast, strengthening further!

With overseas markets hitting record levels in Trumps's first week in office, the Rand rode the tide of optimism, breaking even lower than before, setting a new record for the year of R13.22 on Wednesday afternoon…

We were now moving toward Thursday, our next forecast day, and so far, our forecast from Monday had been spot on!

So, Thursday morning… Our forecast was out early, and gave the outlook for the coming few days (see below - click to enlarge).

Click to enlarge

The preferred wave count showed that the Rand was running toward the end of its short term strength, with a bottoming out imminently due, but with the 13.1685 level pivotal to this scenario. A break below would negate this and signal more rand strength.

And immediately on Thursday, the market strengthened in the early to mid morning, to record a new best level for 2017 of R13.1942 to the Dollar!

This was nearing fairly close to invalidating Count #1, our preferred count…

...but that was exactly when the market turned!

Following our expected Count for the market to bottom above , it duly did and weakened through the rest of the day.

It was soon over R13.20, then R13.30 and then even over R13.40 very briefly, before settling back down into the mid R13.30s…

Our forecast had played out exactly according to our expectations, which had given our valued clients a nice heads up…

...but if anyone thought that Thursday was all the excitement the Rand had to offer for the week, they were VERY wrong!

By 9am on Friday morning, the Rand had weakened to just sub R13.50 to the Dollar… and that was when the day started in earnest, as the Rand got to work!

In under an hour, it strengthened about 15c, making us start to worry that the wave count had perhaps changed…

BUT THEN as so often happens at these critical levels, some event triggers a move...

... and all we need for that was trusty old Jacob Zuma (who else?), with rumours that a cabinet reshuffle was on the cards to get rid of the dissenters - with prime target being again Pravin Gordhan.

In half an hour, the Rand reversed sharply, back to trading at R13.59/$!

Volatility was again the order of the day, as the Rand see-sawed its way in 15-20 cent moves for the balance of the day to end the week at 13.46 - some 18 cents better of than where it had started.

It had been a whirlwind week in every regard, and the weekend was a much appreciated and needed relief for everyone…

Don’t expect the Rand to slow down, because we sure aren’t…!

There are plenty of upcoming events this next week, and plenty of other factors indicating that we need to keep a close eye on the markets.

Things are just as volatile in America, as President Trump is signing executive orders almost faster than his team can print them. This kind of thing can affect a lot of emotion which surrounds the financial markets…

So keep a sharp eye on all that happens…

...but not too sharp - the news and emotion is more confusing than helpful…

What you need is clear cut information, showing you the difference between speculation and calculated facts.

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