I’ve been asked to look at Brazilian equities and will do so over the weekend, but thought some of you may find this interesting to tide you over till then. I had been working on this since it has been in the news. The Brazilian Real has been bouncing today off of support today. I don’t know if the bounce will end up being a wave (ii) or (iv) as I can argue for either but certainly think it isn’t something to short until up against 0.2775.
We show where to look for the trades
Primary view is that GBP futures are in the first stages of a move that should test or exceed the 2017 low. A monthly chart for perspective is below.
It appears to be breaking beneath support
Bullish scenario is kicking in
Two ways a decline might play out
The main hypothesis is that the DX rise up from 2008 is not yet complete and can accommodate at least one more high over that of the 2017 high. Why do I push back on the idea of a DX high being in and the first impulse down complete or nearly so? Two reasons. One, the move up from the May 2016 low does not look like a well formed impulse but more like a three which is more consistent with a (b) wave high. Two, both monthly and weekly cycles suggest a pretty significant low and a into 2019-2020. I’ll even add a third, that the correction from 2012 to 2014 lasted 22 months, and the correction from the 2015 high marked [iii], to the low last months was 35 months, about as close as you can get to 1.618 expansion in time as you can get thus having price and time pointing to a significant low.
The British Pound ETF (FXB) is assumed to be forming a wave [iv] like most of the major USD crosses. The move up from the early 2017 low has stalled against a possible wave [iv] target but has not quite pushed low enough to break the uptrend.
Both scenarios suggest bullish opportunities in coming months
With the USD weakness that we have being seeing over the past few weeks, it is a good time to update the monthly and weekly charts on both the main and alternate EW counts on a popular ETF for USD, (UUP).