FX_IDC:USDBRL   U.S. Dollar / Brazilian Real
A somewhat confused picture has emerged over the past few days on the USD/BRL chart. I have what looks like a triple top on the monthly and weekly charts, which any chartist will tell you is BEARISH . But…. Over the past couple of days on the daily chart we have what looks like a double bottom which has just completed, which is bullish short-term pattern – so what does this mean and more importantly how do I trade it??

This is always a bit tricky to deal with, but one thing is clear, when a bearish triple top has been formed you would expect the market to start dropping like a stone and if the price action is NOT doing what we would expect it to do that is a major cause for concern. However, it is possible that this is merely a return to point of break out – isn’t it?? Mm, well it could be BUT the market has started to nibble through the neckline at 4.8947. We have yet to see a close above this point but it looks like we might do so today as the moves higher near term look directional. So, what to do? Firstly, I would consider just plain exiting the position or at the very least tightening the stops.

It also helps to have some basic rules in place and one of my rules is that the trend prevails. I tend to look at the monthly chart to get a grasp on the long-term trend. First thing to note on this market is that the long-term bull trend remains intact and the second thing to note is that the market appears to have reversed short term just ahead of the 55-week ma at 4.5235. OK, this would suggest that maybe this near-term bounce higher might have some legs. My second rule is that to completely negate the triple top we have to retrace more than 50% and in this case that would be around the 5.1678 mark.

So extreme caution is warranted, there is enough to suggest that I would be uncomfortable still hanging on to shorts and given the direction moves over the past couple of days I suspect that we are actually going to see some further moves higher near term. Each time you have what appears to be conflicting signals you need to start watching it more closely, it helps to have some rules in place and to pay attention to the long-term trends. If we are going to see a short-term reversal, we should see dips lower ideally hold over the 20-day ma at 4.7073 now.


The information posted on Trading View is for informative purposes and is not intended to constitute advice in any form, including but not limited to investment, accounting, tax, legal or regulatory advice. The information therefore has no regard to the specific investment objectives, financial situation or particular needs of any specific recipient. Opinions expressed are our current opinions as of the date appearing on Trading View only. All illustrations, forecasts or hypothetical data are for illustrative purposes only. The Society of Technical Analysts Ltd does not make representation that the information provided is appropriate for use in all jurisdictions or by all Investors or other potential Investors. Parties are therefore responsible for compliance with applicable local laws and regulations. The Society of Technical Analysts will not be held liable for any loss or damage resulting directly or indirectly from the use of any information on this site.

The STA is the oldest technical analysis organisation in the world and to celebrate that fact, we have a free downloadable book on technical analysis here -


The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.