Market News & Analysis


Top Story

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. 


From time to time, GAIN Capital Australia Pty Ltd (“we”, “our”) website may contain links to other sites and/or resources provided by third parties. These links and/or resources are provided for your information only and we have no control over the contents of those materials, and in no way endorse their content. Any analysis, opinion, commentary or research-based material on our website is for information and educational purposes only and is not, in any circumstances, intended to be an offer, recommendation or solicitation to buy or sell. 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. No representation or warranty is made, express or implied, that the materials on our website are complete or accurate. We are not under any obligation to update any such material.

As such, we (and/or our associated companies) will not be responsible or liable for any loss or damage incurred by you or any third party arising out of, or in connection with, any use of the information on our website (other than with regards to any duty or liability that we are unable to limit or exclude by law or under the applicable regulatory system) and any such liability is hereby expressly disclaimed.