Since the 22nd of July, the USD/BRL has experienced a bullish trend higher and made short term resistance look vulnerable. However, after testing values near 5.3800 yesterday, the forex pair has seen some selling emerge. The current price vicinity of the USD/BRL should be watched closely by technical traders as they ponder their risk appetite.
The 5.3000 level for the USD/BRL appears to be an important inflection point potentially. This price juncture is near the upper band of the forex pair’s month long range. From early July until the 20th of July, the USD/BRL largely traded between values of 5.3000 and 5.4000. If the USD/BRL can sustain its early morning selling and trade below the 5.3000 juncture it may lead speculators to believe another bearish can emerge.
From the 22nd of June until the 3rd of August, the USD/BRL traded within a range between 5.1000 and 5.3000. The weakness of the US Dollar last week certainly helped fuel the lower price range, but it needs to be said a look at the one-month values for the USD/BRL look fairly tame. The forex pair has offered speculators an opportunity to pursue short term trends. This morning is no different; if proper risk management is used technical traders may be willing to suspect a bearish trend could develop again.
The Ibovespa equity index has been positive the past month, however, early calls this morning via future contracts suggest some selling may take place. This could be merely profit-taking by institutional investors who want to cash out some of their short term profits. Traders should also pay attention to the developing news in the United States regarding hurricane Isaias which is hitting the east coast today and may cause power outages, which could affect trading conditions.
The Brazilian Real remains an interesting trade in forex. Coronavirus statistics from Brazil continue to cause concerns, but economic analysts have indicated because the nation chooses to keep its economy open in many sectors a quicker recovery may develop fiscally. Speculators may be tempted to look at the USD/BRL as a selling opportunity. Entering a selling position within the vicinity of 5.2800 to 5.2900 and looking for downside movement and a test of short term support junctures below could be tempting.
Brazilian Real Short Term Outlook:
Current Resistance: 5.3500
Current Support: 5.2000
High Target: 5.4000
Low Target: 5.1300
