USD/BRL: Rising further post a consolidation phase – Credit Suisse

USD/BRL has surged sharply higher following the completion of a large multi-year bull ‘triangle’ earlier this year, however the market has already reached the ‘measured triangle objective’ at 5.5653, per Credit Suisse.

Key quotes

“We expect a more prolonged phase of consolidation before we see the uptrend resume, with weekly RSI momentum also in heavily overbought territory and shorter-term momentum indicators tiring.” 

“We see resistance initially at the current all-time high at 5.7475, which may cap for now. Thereafter though, we eventually expect a breakout and a resumption of the core bull trend, with the next level at the 6.0000 psychological barrier.”

“Support is initially seen at the late March low and 55-day average at 4.9744/8905, ahead of the ‘neckline’ to the large base and 200-day average at 4.3349/3035, which ideally holds any potential setback.”