USDBRL: Trend Up?
Eddie Tofpik | Nov 06, 2017 05:59
I've written for two months about how the market was Neutral. I've written such things as:
I am certain that we will not continue being Bearish unless this band 3.0860 - 3.0400 (possibly 3.0200) is not dealt with. Upside, we'd need to have consecutive closes over the combination of Long MA currently 3.2160) and Fib band 3.2093 - 3.2223 to turn it Bullish. Hence, I've decided to move the bullet point above into neutral to see how things work out.
This had been the case at the start of the past month but a series of dramatic events on the Daily Chart during Oct have swiftly changed that.
During the first part of October we formed the 2nd Shoulder of a Reverse H+S Formation - you can see it on the Daily Chart above. This was not really evident at the start of the month - though I did publish videos during October pointing out this emerging pattern. The break up through the Neckline (currently 3.1861) happened on the 23rd at the same time as the break up through the Medium MA (currently 3.1862). They both seemed to have kept a cap on the market and are now support.
The first obvious resistance was the recent 50% Fib at 3.2435...well it halted there for a bit but not really. The 1st target for the rise of the 2nd Shoulder was in the 3.2725 area which was coincident with a longer term 50% Fib at 3.2728, the November 2016 - February 2016 move. This was achieved fairly easily. At this point one may have expected a pullback...all the way perhaps to the Neckline and the markets still look good. However, all we had was some hesitation around 3.2725 before last Friday making a great Key Reversal Up and achieving the 'XI' target for the complete Reverse H+S Pattern at 3.3200. The market has therefore done enough.
What's next? Well, all MAs have finally turned higher and the market is well above them which turns the bullet point above Bullish. I'd even go as far as fully Bullish give the KR last Friday. Yet there are some obstacles ahead.
This rally is hitting the resistance formed of the Upper Tine of the Nov 2016 - Feb 2017 Schiff Pitchfork (currently 3.3248) as well as the 61.8% Fib of the now familiar Nov 2016 - Feb 2017 move. These may not halt the rise but will slow the market ahead of the highs up to 3.3485 seen in mid June - that will be the real test. Why? Because beyond that we seemingly have clear water i l l an old 38.2% Fib dating from 2015 at 3.4034 that held the high at 3.4087 for the year so far...these would be the ones to watch on any further breakout. As for the downside...you'd need two consecutive closes under the 50% Fib at 3.2435 to just turn Neutral and consecutive closes back below the Neckline to turn Bearish.
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Support is currently at 3.3015, 3.2825, 3.2728, 3.2670, 3.2480, 3.2435, 3.2233, 3.2174, 3.2045 and 3.1861.
Resistance is currently at 3.3248, 3.3282, 3.3348, 3.3448, 3.3485, 3.3716, 3.4034 and 3.4087.
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