USD/BRL: A number of failures by this market but ones that were telegraphed, though sometimes obtusely. Last time when I was analysing the daily chart two months ago, I was looking to see a move up from the potential double bottom up to points anywhere from ‘X1’ to ‘X3’ that you can see on the daily chart above – I left them to remind me of my fallibility.
Next, we had the possible bullish bow tie formation of the MAs that I pointed out and which ought to kick in between the 6th – 13th of Dec 2016. Well it kicked in first on the 5th and then fully actioned from the 6th…and it was false – a signal but it was a bearish signal instead of a bullish one. To be honest, I’ve seen BTs were things get delayed and possibly not clear. This is the first one that went the opposite way.
Anyway, from late Dec 2016 through this past week we’ve seen the market head lower within a bearish channel 3.1449(dynamic) – 3.0209(dynamic). Interestingly, this bearish channel has given the angle of attack of the market lower for the whole time…roughly! We’re currently towards the top end of it. All well and good but it may possibly be coming to an end, firstly we are as I mentioned…at the top end of the bearish channel whilst the market is at the bottom end of recent activity and we have a load of support dating not just from 2016 but as far back as 2003.
Support is currently at 3.1120, 3.1006, 3.0854, 3.0605 and 3.0296.
Resistance is at 3.1449(dynamic), 3.1628, 3.1944, 3.2345, 3.2440, 3.2560 – 3.2610(dynamic), 3.2921 – 3.2954 and key at 3.3040. Given the action up to date on the bearish channel and that all MAs are pointing down, I am minded to move the bullet point above to bearish but I am cautious because of the wealth of support nearby. Additionally, we are testing the recent late 2016 lows. So, bearish but with a question mark it is…
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