In this article, we will take a look at the Emerging Market Currencies. Lately, we have a strong USD strengthening against these currencies which could be a worrying sign of their incoming weakness or a trade war. No matter the reason is, we could see a new crisis looming in the stock markets across the world if we get a slow down of this economies. We will take a look at the long-term technical analysis perspective of the USD/BRL, USD/RUB, USD/CNY and USD/TRY.
USDBRL is breaking below the 55 WMA (weighted moving average-red line) 3.8080 level. this break could lead to a 3.7000 pullback. This is the strong level of the support and you should wait for a reaction. A bounce off this level would lead to a 3.8000 test again.
USDRUB is breaking above the consolidation triangle 63 level for an upside continuation into the 67 level. At this stage, you should look for the long trade entries with the stop loss below the 62 level targeting 67 at least on the ongoing pullback. The pair is in the middle of the consolidation and the strong resistance is 64.1410 level.
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USDCNY is breaking above the daily 200 SMA 6.4564 level. This is an important upside break for the pair and it would lead to an upside extension into the 6.8000 level. After reaching the mentioned level it is now a strong resistance and we could see a pull back from here. Look for the reaction from this level on a daily close basis. Daily close above the 6.8000 level would lead to an upside continuation.
USDTRY is in a upside consolidation pattern after the 4.4900 level pullback retest. Continuation triangle has been broken and we have an upside extension into the 4.9679 level. A strong upside support is 4.7600 level. The pullback into this level should be used for trading entries.
We have used the combination of the top-down trading analysis to get this key levels explained on the charts. USD is in the near-term uptrend continuation against the most of the EM currencies and we could see the continuation of this trend moving forward.
Happy trading! (click on the chart to enlarge it)
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