USD/BRL: Speculative Advantage Grows, Choppy Range Persists

The USD/BRL continues to foster a rather tight trading range, one in which support and resistance has proven durable.

Speculators love to take advantage of long-term trends, but often are challenged by sudden reversals which frequently pester Forex pairs. The USD/BRL offers the advantage of knowing that the long-term trend is a rather consolidated path. Traders who wager on the direction of the USD/BRL already know that support and resistance levels are rather tight and that in order to profit from speculating on the Forex pair, a rhythm must be found technically.

Traders need to only look at the past five days of trading to quickly understand what has been taking place within the USD/BRL, without even looking at the past six months. After testing higher values last week, the USD/BRL is again testing lower realms of its rather tight range. The question traders may ask is if the rather consolidated range is going to see a breakout. However, after such a long time period of rather tight support and resistance levels being tested, perhaps it is better to simply find an advantage by buying lows and selling highs using short-term technical charts.

The current value of the USD/BRL is trading near low water marks. Conservative traders may want to wait for some more downside price action to take place before activating buying positions, but if a trader can go long the USD/BRL near the 5.3500 mark and look for profits around the 5.3800 to 5.4000 junctures, this may prove worthwhile.

Current support levels near the 5.3300 juncture have proven adequate. Yes, there have been moves lower, but even when the USD/BRL has broken towards prices like 5.2800 during the third week of January, the tendency of the Forex pair has been to reverse higher. Further illustrating the point is that the exact description for the USD/BRL can be used when discussing its upward movements, which have been prevalent also. Resistance between the 5.4000 and 5.5000 value junctures have proven adamant the past month of trading.

Looking for a breakout within the USD/BRL and holding positions excessively could prove to be a costly mistake by speculators. The ability to find quick-hitting trades and using current support and resistance levels is an opportunity for traders who have the ability to use select limit orders and like faster action.

Brazilian Real Short-Term Outlook:

  • Current Resistance: 5.4300
  • Current Support: 5.3300
  • High Target: 5.4900
  • Low Target: 5.2800

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.