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A Countertrend Play In The Brazilian Real

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In this post we highlight some opportunities that are shaping up with the Brazilian Real, and we show how our charting of the U.S. Dollar Index helps identify those opportunities.

The Real's persistent decline since 2011 has taken the form of an impulsive (five-wave) move with little or no overlap of the subwaves. This is similar to the impulsive form we described last month with regard to the Japanese Yen.

Within the five-wave [i]-[ii]-[iii]-[iv]-[v] pattern, the Real appears to be working its way through the middle or later part of wave [v], and it recently tested a Gann-related support area at 0.2404 that is also in the vicinity of the prominent 2015 low.

We expect the Real to bounce from nearby, even though it eventually should reach lower as part of wave [v]. The Fibonacci 38.2% retracement level at 0.2734 would be an attractive upward target for a minor bounce, which could represent either sub-wave (ii) or sub-wave (iv) within [v].

Note that the test of Gann-related support and a potential bounce occur at a time when the Dollar Index appears ready for a small downward retrace, as we showed in a post two weeks ago. Meanwhile, one of our favored cyclic detection tools the Lomb periodogram shows the current time and price to be a candidate for a cyclic low in the Real.

For traders working on a weekly or monthly time frame, the better trade may come later in 2018 after the Real tests and responds to resistance. There is another Gann-related support near 0.2040 that we would treat as a preliminary target. We expect to be able to refine our projection of support levels once the pending retrace appears to be complete, perhaps late in 2018.

There are still a few days left for traders to take advantage of our special summer offer. Get a whole year of charts with morning and evening updates at a deeply reduced price. Trading On The Mark posts twice-daily updates for the Dollar Index, Euro futures, the S&P 500, crude oil, treasury bonds, and gold.

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Trading On The Mark keeps its subscribers on the right side of the market on timeframes ranging from intraday to swing trading. Beyond the public blog, subscribers have access to frequently updated charts and posts covering equities indices, currencies, bonds, metals, and other commodities. Members also can participate in TOTM’s live intraday trading forum, which provides real-time guidance on market conditions and entry and exit opportunities in the e-mini contracts for equities indices and currencies. 

TOTM’s  technical approach is grounded in Elliott Wave and Gann techniques, while also making use of Fibonacci relationships in price and time, cycles analysis, and other more esoteric approaches. Most subscribers have several years or decades of trading experience, yet the website offers an environment where the dedicated intermediate-level trader can learn much that is not published in books or found in courses.

The company was established in 2008 to meet the needs of an online community of traders who have worked together since before 2005.

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