USD/BRL Technical Analysis, Ibovespa Index – TALKING POINTS
- USD/BRL jumped over two percent after disappointing Brazil oil auction
- The pair is now trading within a familiar congestive range: what next?
- Technical signals show Ibovespa upside momentum is starting to fade
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USD/BRL spiked over two percent and re-entered a familiar congestive range between 4.0538-4.1935 after news broke that Brazil’s oil auction failed to generate the level of excitement analysts had forecasted. The move had more to do with capital rushing out of the Brazilian Real than traders flooding the US Dollar from risk aversion. The move marked the biggest one-day rise since August 5, 2019.
USD/BRL Overlaid with Brazilian Real Index
USD/BRL chart created using TradingView
Zooming out to a weekly chart shows the pair is continuing to climb well above the 2011 August uptrend and appears to be in the process of forming an Ascending Triangle continuation pattern. The prior uptrend preceding the consolidation period typically accompanies this kind of chart set up. Looking ahead over a longer time horizon, traders may wait for USD/BRL to break above the 4.1739-4.2126.
USD/BRL – Weekly Chart
USD/BRL chart created using TradingView
The Ibovespa ended the day a little over 0.30 percent lower. This comes as negative RSI divergence is showing that upside momentum for the index is fading. While this may not necessarily precede a turn lower, it does show that enthusiasm pushing it higher is now losing steam. Looking ahead, the pair may test the 106001.35-105319.40 range before potentially flirting with the June 2018 uptrend.
Chart Showing Ibovespa Equity Index
Ibovespa chart created using TradingView
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--- Written by Dimitri Zabelin, Jr Currency Analyst for DailyFX.com
To contact Dimitri, use the comments section below or @ZabelinDimitrion Twitter
