The USD/BRL closed near the 5.1037 level yesterday and a low of nearly 5.0700 was achieved. The depth of value tested yesterday touched values last seen on the 12th and 15th of August. Intriguingly after testing the lower marks in the second week of August, the USD/BRL currency pair then began to climb higher reaching a short term result of nearly 5.2190 on the 19th.
The moves of the USD/BRL have mirrored the results of many major currency pairs, but traders should remember that transactional volumes remains choppy at times and volatile spikes can develop which seem to follow no correlation to global Forex momentarily. The opening for the USD/BRL today as always should be monitored, because current values are within sight of rather important technical support, which if tested could prove to be a dynamic lynchpin and cause price action turbulence.
Support near the 5.1000 USD/BRL should be monitored for Implications
If the 5.1000 support level is penetrated lower and the price is sustained beneath, this could cause speculators to believe the USD/BRL has the capability to test values seen the 10th of August through the 16th. However, while trading near lows of around 5.0340 to 5.0950 the USD/BRL also saw strong moves higher which tested the fortitude of speculators. Risk management remains essential while wagering on the USD/BRL because tranquil days can turn into sudden storms.
- The price range of 5.0975 to 5.1140 should be watched as the USD/BRL opens because the pair often produces gaps which can prove troubling for speculators without risk tactics in place.
- Short term traders should be ready for choppy conditions as the USD/BRL tests lows and global Forex conditions remain within a nervous behavioral sentiment cloud.
Reversals are certain to occur in the USD/BRL as the Trading Range is Tested Short Term
Traders may be tempted to look for upside in the USD/BRL if the 5.0950 to 5.1025 support levels hold for short term wagers looking for quick hitting results. Traders of the USD/BRL in the near time should be ready for a test of the current range and not be overly ambitious, meaning they should be willing to cash out winning trades if they develop and then wait for other technical ratios to develop.
The USD/BRL will certainly react to policy speeches which come from the Jackson Hole meetings over the next few days in Wyoming. Strong hawkish Federal Reserve policy will likely serve as counterweight for the USD/BRL as it tests support levels. If U.S central bank policy speeches in the next few days suggest more interest rate hikes beyond what is expected in September, the USD/BRL could find reason to be bought again and produce a test of resistance levels.
Brazilian Real Short Term Outlook:
Current Resistance: 5.1149
Current Support: 5.0929
High Target: 5.1726
Low Target: 5.0445
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