USD/BRL: Trend?
Eddie Tofpik | Jan 01, 2018 06:53
USD/BRL: Trend?
My initial thoughts when looking at the Monthly Chart above was one of indecision and of how quiet 2017 had been for this pair considering it is an EM currency and also because it is ...well...Brazil. I'd somehow expected more Bitcoin and less... well what we've gotten. Anyway, the reasoning behind this was not only the lack of volatility but the action this past year. Three months of Indecisive Spinning Tops, one month of an Indecisive Doji Cross, failed Bearish Engulfing Pattern mid-year and to top it - the whole year looks like an Indecisive Spinning Top. This moved me towards looking at this as possibly indecision continuing the move lower and maybe a Basing Action based upon the lack of impetus to breach the key 50% Fib at 2.8872. So far...so good.
However, I started looking closer and the 2016 - 2017 action and seemed to recognise a pattern but I couldn't remember initially which one it was. I had to look at my reference materials to recognise a name for what I now think it may be - a possible Bearish Three Falling Peaks Pattern. The next few months should show if this pattern is true or not but this interestingly contradicts the Indecisive, even Bullish tinge that would otherwise seem likely at first glance. The Bearish measure is from the late 2016 high to the 2017 low and doubling down. To precis - a possible move to just under 2.6000. Now there is no certitude on this as yet but it looks a reasonable alternative to going sideways or trying to move up again.
Yet there are obstacles, the first is the 2011-to-date Uptrend (currently 2.9391) then the 5 Year MA (currently 2.9169) and then the previously mentioned 50% Fib at 2.8872. A lot of support is likely in a relatively small area and oddly most of it below 3.0000. Nevertheless, the opportunity is there, only consecutive closes over the recent 50% Fib at 3.6423 would make it potentially Bullish and to be Indecisive...well just carry on as you've done this past year. MAs have two up, one down and one sideways. On balance I'll put the bullet point into Neutral...though I'd keep a very close eye on the Bearish Three Falling Peaks Pattern possibly coming true.
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