The cost of one U.S. Dollar in Brazilian real jumped significantly on Monday, gaining a 'very big' 3.2% to close at 2.3109 real. The exchange rate has seen a big move from the 1.6 real level in August-September, but has been in a trading range from 2.1-2.6 since October.
Q: How has the value of the Dollar in reals performed since 2000 when it has seen a one-day rally of 1.25% or more in the first seven calendar days of any month?
A: According to the 32 previous occurrences of this event, EventEdge indicates that USD/BRC has shown a weak bullish edge that peaks seven trading days after the event. Thus, the projected date for the peak of the bullish edge relative to the current event date (Monday, Feb. 2, 2009) is Wednesday, Feb. 11, 2009. USD/BRC rallies in 72% of the cases (23 of 32) by an average of 3.4% relative to the close on the event date. The average of the nine declines is 1.3%. The overall return of the 32 cases is 2.1%, which, based on the close of USD/BRC on the event date (2.3109), provides a target price of 2.3594.
Anthony Kolton is president of Logical Information Machines and Markethistory.com, Inc.
