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FX Fundamental Analysis


2.35, the BRL may be validating an old trader adage of ‘double tops hold, triple tops fold’ - in January we saw two probes of the 2.44 region, only to be subsequently rejected. Two years ago, the BRL was trading at 1.70 USD and based on a coupling of what may be technical r ej e ct io n s combined with im p r o v ing f undament a l s and high interest rates, the BRL may resume its uptrend against


the


USD to so me w he r e around 2.08, which would be a simply 50% r et r ac e me n t of the entire move. We’ll see but with World Cup soccer and Olympics allowing Brazil


to showcase itself


that whatever has happened previously is already done and whatever will happen in the future is yet to be known.


In such cases where uncertainty prevails, markets often default


or monitoring our FX risk are probably more concerned with these type of factors that influence currency gyrations in the short- term, in addition we often find that it does no harm in attempting to understand how market players may be positioned a r o u n d p ar t i c u lar events such as the outcome of central bank meetings.


The Brazilian Real may resume its uptrend against the US dollar to somewhere around 2.08


over


the next couple of years, perhaps this could be one of the biggest currency moves ahead!


In this issue, although it’s a very hot topic, we only touched briefly on the regulatory theme and what impact this may have on FX, for the simple reasons


52 FX TRADER MAGAZINE April - June 2014


to patterns of short-term trend trading, as illustrated by the tight ranges mentioned, before breaking out or adopting new trends once confirmatory and technical signals have been provided and validated along with influence of economic data and/or politically-driven events.


In such an environment, those of us most interested in managing


That said, we appreciate that f u n d amen ta l aspects do include the influence of authority in various forms and we are always pleased to help try and explain the effects of these often unseen


forces at work when it comes to market commentary and insight.


In the meantime, we welcome


feedback, good luck in the markets and see you next issue!


Kevin Sollitt


For further details or discussion you can contact the author here.


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