miroslava.micunkova's picture

The lagging EURZAR is now about to catch up to USDZAR rally

USDZAR & EURZAR have both experienced a multi-year rally which started in early 2011 and peaked in January 2014. Their performance started to diverge by mid 2014 when USDZAR completed a short (23.6%) correction of the 6.549-11.388 advance and headed higher anew.

On the contrary EURZAR extended the correction from the 15.489 January 2014 peak to 38.2% retracement level and as of yet shows no signs of an impending reversal on a monthly chart. However, zooming in to a daily chart (pls see second chart) gives us more clues about the next possible development.

 

 

 

 

By applying the Elliot Wave count to the ongoing correction, we conclude that the 12.686 reached in January 2015 may be a key higher low due to achieving a maximum count of waves for a double three*.  Final evidence may come after a clear break above the 13.446 (11 February) recovery high. This will also complete a bullish base to underpin a rally.

In case of a bullish base completion in EURZAR, we are looking for a minimum upside target of 14.206 (measured as 100% of 12.686-13.446 from 13.446) and 14.764 (16 December high). Our long-term target (6 month+) points to a top of the projected bull channel now at 17.297 (rising by 0.026 a month). Further out we are also looking at 19.461 (measured as 100% of 8.714-15.489 from 12.686).

Our nearest target for USDZAR points to a top of the projected bull channel now at 12.814 (rising by 0.012 a month). Our long-term (6 month+) target points at 13.267 & 15.115 (measured as 61.8% & 100% of 6.549-11.388 from 10.276.

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