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USD/BRL: Brazilian Real Targets One Month Resistance Levels

By Robert Petrucci
Robert Petrucci

Robert Petrucci has worked in the Forex, commodity, and financial profession since 1993. Important aspects of his work involve risk analysis and advisory services. As an advisor in a Family Office he maintains a conservative approach for wealth management and investments. Robert also works in private finance with investors and companies delivering financial and management services....

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Although the Brazilian Real has held onto plenty of value since hitting low water marks against the US Dollar it is now testing early June resistance levels.

Important resistance was tested by the USD/BRL late on Monday but has seen a bit of a reversal the past few hours. A level of 5.40 appears to be a target by buyers of the USD/BRL, but short selling has produced better values for the Brazilian Real early today and has put it back into a known trading range.

The past five days of trading for the USD/BRL has produced a predominant range between 5.10 and 5.30. The current price levels of the Brazilian Real appear ready to test resistance, but speculators will likely find themselves attracted by consistent trading of the USD/BRL which has been between the 4.90 and 5.10 values for a long duration of June.

Early market sentiment today via global equities indicates risk appetite may be emerging and ready to stay strong the remainder of the day. If forex traders lean towards selling the US Dollar, the Brazilian Real may experience additional strength from this underpinning of increased confidence. However, the USD/BRL short term continues to highlight two diverse opportunities for traders depending on their perspectives.

Technically speculators certainly could not be faulted for believing the USD/BRL will reverse away from resistance and experience more selling. Support levels for the Brazilian Real look vulnerable because of their nearby technical striking distances. If current support near the 5.1500 level is accomplished the USD/BRL could see increased selling with traders keeping a target of 5.0000 in mind.

The USD/BRL appears to be within an important testing ground and risk management will be needed by speculators looking to short this forex pair. Coronavirus worries loom for South America and traders must be ready for sudden gyrations from news and rumors that circulate. However, taking into consideration the potential for greater risk appetite in the global markets today, traders may look to short the USD/BRL but they should practice patience. Luckily key resistance near the 5.40 to 5.45 junctures is relatively close, meaning that if these levels are touched, they could prove relatively friendly stop-loss entries should the USD/BRL sustain its short term trend and find additional buyers.

Brazilian Real Short Term Outlook:

Current Resistance: 5.3800

Current Support: 5.1500

High Target: 5.4500

Low Target: 4.9600

USD/BRL

By Robert Petrucci
Robert Petrucci has worked in the Forex, commodity, and financial profession since 1993. Important aspects of his work involve risk analysis and advisory services. As an advisor in a Family Office he maintains a conservative approach for wealth management and investments. Robert also works in private finance with investors and companies delivering financial and management services.

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