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Emerging Forex Technical Analysis November 2017

November 24, 2017

The month of November is proving to be very tormented for emerging currencies, but there is much more than this.

The market has rewarded the euro with a rise of the European currency with a great appreciation for emerging currencies.

New historical lows on the Turkish Lira, but also on the Mexican Peso and South African Rand under pressure. That is why we want to devote this month to exotic crosses against the euro.


The weakness of the Turkish lira does not stop and the fall is getting dramatic outlines. The Try devaluation is more than 22%  in 2017, and this weakness has to be added to the -17% and -12% in 2016 and 2015. A heavy sell off that seems to have reached the extreme now. As we can see from the chart, prices have surpassed the upper wall of the regression channel, an event already seen in 2015 and at the beginning of  2017 with very speculative phases with a cooling down in the rise with downward corrections in the coming weeks. This is what we are also expecting now with targets to be calibrated around 4.18 / 4.20.



The EurZar bullish move did not come as a surprise because in 2017 the test of the support that linked the rising lows since 2011 made us think of a recovery of the uptrend. The wedge shape that had characterized all 2016 resulted in an upward trend in 2017 exceeding area 15 / 15.25 with a decisive acceleration of the bull market close to the historic tops. Along with the Turkish Lira, the South African Rand is one of the worst emerging currencies of last year. The accumulated -16% has brought EurZar in a weekly overbought, but as evidenced by the historical casuistry of the past, the first overbought must be followed by others to suggest a primary top.



After months of trading in range with the resistance at 3.80, EurBrl seems to have come out from the top. The break of this resistance shows a lot of problems for the Brazilian Real; in fact, if we observe the EurBrl volatility profile (guided by Bollinger bands), the level is so low that next move will be crucial. Considering that a resistance that contained EurBrl has been violated for more than a year, we can already guess what the future direction with a minimum target at area 4 will be.



As a victim of Trump's highly-announced policies, the Mexican Peso is still under pressure. EurMxn from the low of 19.78 in April has risen until reaching area 23. The optimists on the Peso are still thinking of a possible bearish head and shoulder figure with a neck line in area 20. Certainly this strong weakness of the Peso has brought EurMxn close to the historical lows, putting investors to the test. Here we could try a short EurMxn, trusting in a lateral medium-term scenario, but surely the overrun of January top at 23.50 is likely to put the Mexican currency in serious troubles.


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