USD/BRL Breaking Out

This may be the week USD/BRL finally breaks out of cup and handle formation.

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. 


This report is intended for general circulation only. It should not be construed as a recommendation, or an offer (or solicitation of an offer) to buy or sell any financial products. The information provided does not take into account your specific investment objectives, financial situation or particular needs. Before you act on any recommendation that may be contained in this report, independent advice ought to be sought from a financial adviser regarding the suitability of the investment product, taking into account your specific investment objectives, financial situation or particular needs.

GAIN Capital Singapore Pte. Ltd., may distribute reports produced by its respective foreign entities or affiliates within the GAIN Capital group of companies or third parties pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the report is distributed to a person in Singapore who is not an accredited investor, expert investor or an institutional investor (as defined in the Securities Futures Act), GAIN Capital Singapore Pte. Ltd. accepts legal responsibility to such persons for the contents of the report only to the extent required by law. Singapore recipients should contact GAIN Capital Singapore Pte. Ltd. at 6826 9988 for matters arising from, or in connection with the report.

In the case of all other recipients of this report, to the extent permitted by applicable laws and regulations neither GAIN Capital Singapore Pte. Ltd. nor its associated companies will be responsible or liable for any loss or damage incurred arising out of, or in connection with, any use of the information contained in this report and all such liability is hereby expressly disclaimed. No representation or warranty is made, express or implied, that the content of this report is complete or accurate.

GAIN Capital Singapore Pte. Ltd. is not under any obligation to update this report.

Trading CFDs and FX on margin carries a high level of risk that may not be suitable for some investors. Consider your investment objectives, level of experience, financial resources, risk appetite and other relevant circumstances carefully. The possibility exists that you could lose some or all of your investments, including your initial deposits. If in doubt, please seek independent expert advice. Visit for the complete Risk Disclosure Statement.

Important Notice:

Cryptocurrencies are not legal tender currency and trading of derivatives on Cryptocurrencies are currently not covered under any regulatory regime in Singapore. Consequently, investors should be aware they do not have protection under the Securities and Futures Act (Cap. 289). Please ensure that you are fully aware of the risks.