USD/ZAR: Reclaiming Swing Low; Lower Time Frame Bullish Reversal

Research Notes December 2025 > https://www.unum.capital/post/rdec2025

Trade Local & Global Financial Markets with Unum Capital.

To get started, email tradingdesk@unum.co.za

Highlights:

• Mechanical Rebound Signal: The Ultra Short Term (2-Period) momentum indicator has surged into the "Strong" tier from extreme lows. This sharp, high reading (often seen as an oversold reaction in a strong downtrend) signals that the recent selling pressure is exhausted, and an imminent mean-reversion bounce is highly probable.

• Critical Support Test: Price is currently challenging the significant long-term 17.00 psychological and structural support level. The reaction here will determine the pair's trajectory for the rest of the year.

• Structural Neutrality: Despite the recent sharp decline, the Mid Term and Base Term momentum indicators are perfectly flat and resting in the "Neutral" zone. This confirms the underlying structural downtrend is currently paused and vulnerable to the short-term bounce.

• Coiled Tension: The large divergence between the high reading of the Ultra Short Term indicator and the flat reading of the structural indicators suggests a volatile decision point. A bounce is likely, but the long-term bearish trend remains the dominant force.

Best Action Timeline/Price Action Probability

• 1 to 10 days: 70% Probability of Technical Bounce. The extreme short-term reading favors a reflexive rally toward the immediate resistance at 17.20 - 17.30.

• 2 to 4 weeks: 65% Probability of Decision Point. The bounce will test the resolve of the short-term bearish trend. If the structural indicators remain "Neutral," the bounce will likely fail near 17.30, leading to a retest of 17.00.

• 5 to 8 weeks: 60% Probability of Continuation of Downtrend. Unless the structural indicators decisively enter the "Strong" tier, the dominant long-term bearish trend should resume, with price slicing through 17.00 and targeting the 16.50 level.

🟢 Bullish Scenario: Trend Reversal: The reflexive bounce turns into a structural reversal. Price clears 17.30, and the structural Mid and Base Term indicators are dragged into the "Strong" tier, confirming a new multi-month uptrend.

⚪ Base Scenario: Corrective Bounce: Price executes the expected bounce to 17.20, but momentum quickly fades. The pair consolidates tightly around 17.00 - 17.20, waiting for the structural trends to align.

🔴 Bearish Scenario: Structural Breakdown: The reflexive bounce fails, and price slices through the 17.00 psychological support. This signals a continuation of the multi-month downtrend and targets the 16.50 level.

Momentum Profile (Daily Focus)

The momentum structure shows short-term extreme mean-reversion pressure:

• Ultra Short Term: Indication: STRONG | Slope: Upwards

• Short Term: Indication: NEUTRAL (Approaching Strong) | Slope: Flat/Upwards

• Mid Term: Indication: NEUTRAL | Slope: Flat

• Base Term: Indication: NEUTRAL | Slope: Flat

Core Thesis USDZAR is at a major inflection point. The technical picture dictates an imminent counter-trend bounce from the 17.00 support level due to exhausted short-term selling. However, the structural trend remains bearish/neutral, meaning the primary strategy should be to fade the expected bounce at higher resistance levels unless the structural indicators show clear commitment to a reversal.

Key Actionable Zones

• Immediate Resistance: 17.20 - 17.30 (Bounce Target / Trend Reversal Pivot).

• Critical Structural Support: 17.00 (Psychological Round Number / Inflection Point).

• Major Support: 16.50 (Extension Target).

• Trend Floor: 16.00 (Deep Support).

Lester Davids

Senior Investment Analyst: Unum Capital