BRENT CRUDE & EMERGING MARKETS

Brent Crude is breaking out of a triangle after 3 years of sideways consolidation. Target for this rally is at least $130 per barrel. Also note that $110 is the 50, 100 & 200 Daily MA plus also 50,100 & 200 Weekly moving average. Hence a breakout from this consolidation is very important. Historically, EM equity bull runs have always lead Brent bull runs by 2-6 months. We saw this in 2007 and again in 2010. Also, commodities as an asset class is the only one left untouched by the huge liquidity tsunami in global markets. One more relation: when crude starts breaking out, we see corrections in all EM asset classes – Equities, FX and bonds.

BRENT CRUDE WEEKLY

Also attached below are similar triangle breakouts in USDJPY and USDINR

Now the trade ideas:

1. Buy Brent at $115 for $130-140 with SL below $1082. Buy USDINR at 60.15 with SL below 59.80 for 61.30-61.503. Sell EM equities with own trade management (expect at least 5-10% correction in leading indices)

USDJPY Daily USDINR Daily