Brazilian REAL to accelerate devaluation against the USDWe suggest that the Brazilian Real is in a long cup&handle trend formation here showed on the monthly frame.
We expect an acceleration on the REAL devaluation once the 4 reais level is crossed.
Other fundamental aspects in favor of this view are the Brazilian Government several recent failed attempts to revert the current negative patter, the decaying Brazilian economy and the country's political turmoil. We can't see any fundamental that could revert the course of the REAL devaluation, on the opposite the odds are stacking against it.
Technically speaking the only positive aspect of the chart for the REAL is the overbought RSI/Scholastic for the USD. That signals a possible incoming reset of these indicators, and we would expect some sideways action for couple of months until the 4 Reais level is broken.
We favor a long USD for the next 24 months trend.
