CLP: Familiar Sight

Yesterday we highlighted the potential for short-term weakness in the Chilean peso, a view which played out as the unit fell to a three-week low of CLP527.40/US$. We mentioned that we have noticed a familiar technical pattern taking shape in CLP/US$, which the accompanying chart illustrates. Over the past year, the peso has twice failed to breach key resistance (in December 2005 and April-May 2006), and both times the currency has retraced sharply. In the previous instances, this involved resistance at CLP510.00/US$, which led us to suggest correctly at the time that the currency had peaked. This time, the key

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