The Brazilian Real remains a technical battleground for speculators using charts and searching for short term trading possibilities. The USD/BRL approached important resistance yesterday, but then experienced a reversal and has seen an increase in selling. Short term support for the USD/BRL is near 5.3000 and this may prove appealing to speculators today as a juncture which could reflect a change in momentum for the Brazilian Real.
The last month of trading for the USD/BRL has provided choppy trading and a slightly bullish trend in favor of the US Dollar against the Brazilian Real. However, sentiment may be changing again in the forex market as risk appetite has emerged globally in the short term and a potential consideration Brazil’s economy may have seen the worst of its coronavirus impact already. While it is a government entity, so its statements must be inspected carefully, the Central Bank of Brazil has projected a better than expected decline in growth the remainder of the calendar year and has stated it believes the worst of the impact economically has been experienced.
Early calls on future markets from America, also point to a day in which gains are expected, including Brazil on the Ibovespa. However, there is an old saying in trading which says buy the rumor and sell the fact; because it indicates that experienced financial institutions have already acted upon news which is being made public now because of their existing capabilities within business – and economic – intelligence. Speculators may believe opportunities still exist, however, and will attempt to join an optimistic party and sell the USD/BRL.
The USD/BRL has actually provided a fairly stable range of value for speculators to trade, and the addition of choppy values within a consolidated band has offered plenty of opportunities. Speculators who believe the USD/BRL will see increased short selling today cannot be faulted and selling into the forex market at the current levels for the Brazilian Real while trading between values of 5.3500 and 5.4000 may be deemed attractive.
There are no sure things when trading and stop losses always need to be used particularly when a trader is using a lot of leverage. Because the USD/BRL has provided fairly consistent resistance near the 5.4500 to 5.4900 range, short-sellers may believe there is reason to suspect downside action and a test of vulnerable support will develop short term.
Brazilian Real Short Term Outlook:
Current Resistance: 5.4400
Current Support: 5.3000
High Target: 5.4600
Low Target: 5.2700
