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 crysis 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 has been rejected from a historical highs at the 4.2000 level and has reversed to a strong long-term support 200 SMA, on this weekly chart 3.000-3.2000 zone. The break above the strong horizontal upside resistance is now making a case for the upside continuation into the 4.2000 level again after the brief possible pullback into the 3.3500-3.5000.
USDRUB after a period of the strong volatility and extended consolidation recently the pair has broken to the upside above 58.64 level which is now acting as an upside support for an extended continuation higher into the 67.23 level. Further strengthening of the USD also is expected here.
USDCNY is pulling back to a strong Fibbonacci support 0.764% retracement level of the 2013-2016 upside swing. This bounce off the 0.6258 level could lead to an extension into the 6.5000 level higher where is the strong upside resistance for this pair. Reaction to this level will be significant. In difference to other EM currency pairs, this pair has a limited upside potential.
USDTRY is breaking above the consolidation flag formationabove the 4.000 level. Measured by the only technical anaylsis tool we can use for this pair, Fibbonnaci extension, we can see that the pair is testing the 61.8% extension 5.000 level. Daily close above this level would lead to a continuation into the 5.9440 level which would be a 100% extension.
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 continuation of this trend moving forward.
Happy trading! (click on the chart to enlarge it)
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