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.
Source: Thomson Reuters Eikon
The behavior of the Group of Seven currencies – euro (EUR=), pound (GBP=), yen (JPYUSD=R), and Canadian dollar (CADUSD=R) – versus the BRIC – Brazilian real (BRLUSD=R), Russian ruble (RUBUSD=R), Indian rupee (INRUSD=R) and Chinese yuan (CNYUSD=R) – 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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