USDBRL Breaking Out
This may be the week USD/BRL finally breaks out of cup and handle formation.
Share this:
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, City Index
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, City Index
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.
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, FOREX.com
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, FOREX.com
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.
Latest market news
The complete CFD trading experience
Award-winning platforms, competitive spreads, low commissions and dedicated support.
We live and breathe the markets and are dedicated to helping traders realise their ambitions as we continue to set the industry bar.
Economic calendar
Web Trader platform
Our sophisticated web-based platform is packed with features.
Related articles
USD/JPY outlook: Hawkish Fed recalibration pressures the yen
Stronger US growth momentum and rising Treasury yields are keeping USD/JPY pointed higher, even as Japanese policymakers try to limit the pressure building across domestic markets.
USD/MXN Forecast: Peso Loses Momentum Ahead of Banxico Decision
Over recent trading sessions, the Mexican peso has started to show signs of losing strength against the U.S. dollar. This can be seen in the performance of USD/MXN, which has gained more than 1.7% over the last three sessions, highlighting the dollar's renewed strength against the peso.
Euro Short-term Outlook: EUR/USD Selloff Nears Critical Yearly Support 9 23 2026
Euro has fallen seven of the past nine sessions, with stretched momentum raising the stakes as EUR/USD closes in on a major inflection zone.
StoneX Europe Ltd may make third party material available on this website which may contain information included but not limited to the conditions of financial markets. The material is for information purposes only and does not contain, and should not be construed as containing, investment advice and/or investment recommendation and/or an investment research and/or an offer of or solicitation for any transactions in financial instruments; any decision to enter into a specific transaction shall be made by the client following an assessment by him/her of their situation.
StoneX Europe Ltd makes no representation or warranty and assumes no liability as to the accuracy or completeness of the information provided, nor any loss arising from any investment based on a recommendation, forecast or other information supplied. You should always seek independent advice as to your suitability to speculate in any related markets and your ability to assume the associated risks, if you are at all unsure. We are not under any obligation to update any such material. Any opinion made may be personal to the author and may not reflect the opinion of StoneX Europe Ltd.