The USD/BRL has seen a bullish trend emerge the past week which mirrors many other major Forex pairs. However, speculators who enjoy trading the Brazilian real may benefit from the rather tough track the USD/BRL has endured the past nine months. Yes, the USD/BRL did enjoy a bearish trend since late October, but even its price action downward often produced a choppy trading environment, which likely proved difficult for many traders.
While speculators of other Forex pairs may have a hard time changing their perspective regarding direction and sentiment regarding outlook, USD/BRL traders are likely feeling comfortable with the recent price action. In fact, the rather unconvincing bearish trend that the USD/BRL was able to accomplish the past few months may now serve as a rather easy way to take advantage of the recent reversal higher.
The USD/BRL is challenging highs not traded since November. If resistance above near the 5.5300 mark proves vulnerable, it will create a focus on the 5.6400 level above. These values are important milestones for the USD/BRL, because if they are punctured higher, it could set up a test of prices the USD/BRL exhibited in late October.
The recent bullish surge in the USD/BRL may not endure and some speculators may believe that bearish price action will develop again soon. Traders should be cautious; the USD/BRL tends not to move with volatile outcomes, but yesterday’s opening which started the week did produce a gap higher, and this is a sign that the USD/BRL is correlating to other major Forex pairs. The recent strength of the USD may prove to be short-lived, but for the moment it should be taken seriously.
Traders can use limit orders to enter their positions for the USD/BRL. Buying the Forex pair may prove a reasonable speculative position short term and traders can use rather tight stop loss ratios comfortably. Yesterday’s gap higher via the USD/BRL was not the only interesting circumstance; the ability of the Forex pair to sustain its higher values also may be an indication that the recent bullish trend may continue to produce additional upward momentum. Short-term traders who like the USD/BRL may feel there is opportunity via buying positions and pursuing higher values.
Brazilian Real Short-Term Outlook:
- Current Resistance: 5.5300
- Current Support: 5.4300
- High Target: 5.6400
- Low Target: 5.3700