USD/BRL: Short Term Trades Remains the Quest for Speculators

Robert Petrucci

The USD/BRL remains locked within a tight range which continues to lack a strong trend which may be helping short term speculators.

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The lack of a strong trend within the USD/BRL can be used as an advantage by day traders who are able to monitor the forex pair technically and have the ability to use fact acting tactics. Support levels remain staunch within the USD/BRL and resistance is also proving adequate, however sudden spikes have also taken place which can be seen with a simple glance at a one day chart.

Traders need to use take profits which are actively working within their trading platforms to cash out winning positions, thus decreasing the chances of a sudden reversal causing winnings to vanish. The 5.3400 level has proven to be firm support recently, but a test of the 5.3000 level was achieved two days ago. Resistance near 5.3900 may look adequate, but the 5.4400 juncture above was seen yesterday.

The consolidated range of the USD/BRL remains under suspicion and speculators are correct to worry about the potential of a breakout. Intriguingly the direction of the breakout remains a troubling question due to the lack of a significant trend by the Brazilian Real. While global markets display a taste for risk appetite, equities in Brazil have produced mixed results the past month and have failed to sustain a rally upwards near term.

Until the USD/BRL is able to produce a strong mid-term technical trend, it may prove wise for speculators to remain within a quick trading mode and simply look for short term movements. The last time the USD/BRL traded below the 5.3000 mark in a strong manner was on the 21st of January. A high of 5.5000 was reached on the 29th of January. Perhaps of interest to technical traders is the apparent incremental lowering of resistance levels the past week and a half.

If speculators are going to wager on downside momentum being generated, they are advised to be patient and use cautious amounts of leverage. The notion the USD has been weak against many other currencies can be used as evidence the USD/BRL may have the ability to create a bit of bearish flourish, but until the 5.3400 to 5.2800 support junctures are proven vulnerable, traders should not be too greedy. Selling the USD/BRL on slight pullbacks higher remains an attractive short term trade for nimble speculators.

Brazilian Real Short Term Outlook:

  • Current Resistance:  5.3900
  • Current Support:  5.3550
  • High Target: 5.4550
  • Low Target:  5.3200

USD/BRL chart

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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