CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 69% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
Open account
☰
CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 69% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
Open account
✖

USDBRL Breaking Out

November 26, 2019 11:54 AM

USD/BRL Breaking Out

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. 


StoneX Financial Ltd (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.

No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.

For further details see our full non-independent research disclaimer and quarterly summary.

CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 69% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money. CFD and Forex Trading are leveraged products and your capital is at risk. They may not be suitable for everyone. Please ensure you fully understand the risks involved by reading our full risk warning.

City Index is a trading name of StoneX Financial Ltd. Head and Registered Office: 1st Floor, Moor House, 120 London Wall, London, EC2Y 5ET. StoneX Financial Ltd is a company registered in England and Wales, number: 05616586. Authorised and regulated by the Financial Conduct Authority. FCA Register Number: 446717.

City Index is a trademark of StoneX Financial Ltd.

The information on this website 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.

© City Index 2024