USD/BRL Breaking Out

This may be the week USD/BRL finally breaks out of cup and handle formation.

Back on October 21st, we took a look at the Chilean Peso and the Brazilian Real.  We discussed how the protests in Chile were causing USD/CLP to move higher and how other US Dollar/Emerging Market currencies were moving higher as well.  One EM currency pair in particular was the USD/BRL,  which was forming a cup and handle formation on a weekly chart and was on the verge of breaking out.  This may be the week it finally breaks out!

The high for the cup and handle in USD/BRL was 4.2126, however highs of 4.2476 from September 2015  needed to be taken out in order to push through the resistance and possibly accelerate the price move.  On a weekly timeframe, a close above this level would signify a breakout of the cup and handle formation. The target for a cup and handle formation is the depth of the cup added to the breakout point of the handle.  In this case, the target would be near 5.4000!

Source: Tradingview,

On a daily timeframe, USD/BRL actually broke through the triple top of the cup and handle formation on November 18th, however today was the first day it broke above the highs from 2015.   If USD/BRL is to move to the target of 5.4000, it first has to get through trendline resistance near 4.3000 and the 127.2% Fibonacci extension from the highs on August 29th, 2018 to the lows October 30th  2018 at 4.3791.  The final resistance is the 161.8% Fibonacci extension from the previously mentioned timeframe at 4.5954.

Source: Tradingview,

A band of support comes in between the recent triple top on the daily (before breaking higher) and the 2015 highs.  These levels are between 4.1950 and 4.250.  The next level below that is horizontal support from near recent lows near 4.0350. 

Disclaimer: The information on this web site is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement. The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency or CFD contract. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. Any references to historical price movements or levels is informational based on our analysis and we do not represent or warranty that any such movements or levels are likely to reoccur in the future. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.

Futures, Options on Futures, Foreign Exchange and other leveraged products involves significant risk of loss and is not suitable for all investors. Losses can exceed your deposits. Increasing leverage increases risk. Spot Gold and Silver contracts are not subject to regulation under the U.S. Commodity Exchange Act. Contracts for Difference (CFDs) are not available for US residents. Before deciding to trade forex and commodity futures, you should carefully consider your financial objectives, level of experience and risk appetite. Any opinions, news, research, analyses, prices or other information contained herein is intended as general information about the subject matter covered and is provided with the understanding that we do not provide any investment, legal, or tax advice. You should consult with appropriate counsel or other advisors on all investment, legal, or tax matters. References to or GAIN Capital refer to GAIN Capital Holdings Inc. and its subsidiaries. Please read Characteristics and Risks of Standardized Options.

Open an Account