Top Play Against the Herd

It is around this time of the month we start looking at monthly charts to see what instruments might be offering us an interesting play with roughly a week to go in the month.

Many times early in the month, a pair can give a tip off to its upcoming direction, however the move might not complete itself in force till late in the month.

For June 2022, this looks very much to the be the case for the US Dollar veruss the South African Rand. After a brief retracement, USD/ZAR has been probing near term resistance at 16.02. This level looks ready to break to the upside near term.

Meanwhile 60% of USD/ZAR traders are long, which is often a tell tale sign we should be doing the opposite of ‘the herd.’

The primary reason why going long USD/ZAR looks like a great trade right now is because of the reward to risk opportunity.

On the monthly chart, it is clear if  USD/ZAR punches through to the upside it has room to run all the way up to the 17.00 level. This would be a massive run, while your risk could be capped on the downside to the roughly the 15.75 region which has solidified itself in recent days as strong support.

That’s a 4:1 reward to risk ratio on this nice exotic play. Not always easy to find such an opportunity. Take a look!