The USD/BRL is near an important technical juncture of 5.5000. This value is a certain inflection point for the Brazilian Real, the last time it was close to the 5.5000 level was in late June. The bullish trend of the USD/BRL has been strong since the 22nd of July. The range of the USD/BRL has actually been rather polite since trading near the 5.1000 mark in late July, but there can be no doubt that support levels have incrementally risen.
Today’s trading vicinity near the 5.5000 is important because the last time the value of the USD/BRL traded above this consistently was in May. Technically the Brazilian Real is hovering within the middle of its three-month range which has seen values between the 4.8200 and 5.9500 ratios. However, the Brazilian Real has certainly seen buyers of the US Dollar emerge past month. Yes, there have been selling spurts too which have allowed speculators to profit from downward reversals.
Interestingly, global equities remain rather optimistic within indices. Brazilian stocks have done slightly better the past month too. Risk appetite appears to be rather stable and the range of the USD/BRL can actually be considered rather comfortable since the 15th of June as it has traded between the 5.0500 and 5.5000 levels. Which sets up the important question regarding the value of the USD/BRL today and what will happen next? Can this resistance level hold and prove advantageous?
Speculators will certainly have their emotions tested at this level if they want to step in front of the bullish trend. However, traders may consider this juncture the perfect spot to test the true sentiment of the Brazilian Real. If a speculators sells the USD/BRL within the vicinity of 5.4800 to 5.5000 and put a stop loss near the 5.5500 mark this may prove a worthwhile trade. Clues should be searched for by taking into consideration how long this current price range holds. Yes, the forex market may actually continue to show short term bullish sentiment higher and test resistance levels not seen since late May near the 5.6000, but can these values be sustained?
Standing in front of an incoming train is never advised, but a test of the resistance levels which the USD/BRL is demonstrating today could prove a real speculative possibility. Selling the USD/BRL will take fortitude and solid risk management, but it also may prove worthwhile for those who dare.
Brazilian Real Short Term Outlook:
Current Resistance: 5.5000
Current Support: 5.3500
High Target: 5.6000
Low Target: 5.3000
