We have been focusing on the relationship between the G7 and BRIC markets for over five years. History has shown that emerging markets don’t do well in the long term; though during the dark times of the financial crisis, the emerging markets surely looked tempting! History repeated itself, and the exodus from these markets is accelerating.
The behavior of the Group of Seven currencies â€“ euro (EUR=), pound (GBP=), yen (JPYUSD=R), and Canadian dollar (CADUSD=R) â€“ versus the BRIC â€“ Brazilian real (BRLUSD=R), Russian ruble (RUBUSD=R), Indian rupee (INRUSD=R) and Chinese yuan (CNYUSD=R) â€“ shows an explosive chart. The composite FX instrument, which I named G7BRIC, formed a significant bottom in May 2010, and it was all up from there.
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G7BRIC has been exploding up to record highs after breaking the top formed in September 2012. In August alone, G7BRIC surpassed the Fibonacci projections at 114.6%, 123.6% and 138.2%. The latter two targets are most common. The next target is now 2.3255, which the 150% projection.
The signal line of the Ichimoku analysis supports the surge. Only a close below the support of the 123.6% at 2.1988 would lift red flags.
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