The USD/BRL continues to prove it remains an outlier within Forex. The USD/BRL has not yet been able to counter the large spike upwards made late last week. Yesterday’s trading in the Brazilian real touched highs against the USD not seen since early November. It is correct that the value of the USD/BRL was not sustained within the upper realms of the late October, early November value band yesterday, but the ability to climb within these junctures is a definite sign that the Forex pair remains within a stormy bullish price range.
As of this writing, the USD/BRL is near the 5.6100 mark and support levels below are nearby. Traders should monitor the Brazilian real closely; if it is not able to prove that support near the 5.5900 level is vulnerable, speculators may believe another move upwards could develop. However, trading within the USD/BRL has proven choppy for months, and trying to take advantage of any trends more than a couple of days have been difficult.
Until now, the USD/BRL has proven incapable of shaking off the higher moves generated last week. While many other major currency pairs produced capable reversals lower, the Brazilian real has not demonstrated an ability to vacate its upper realms. Interestingly, if the 5.5900 juncture does start to show weakness, it could open the door to test the 5.5200 mark quickly, because of the lack of technical support within this range.
Speculators who are looking for downside price action will also want to look at the long-term charts of the USD/BRL from early November 2020. After trading in the upper band of its bullish value early in November, the USD/BRL did produce a rather swift decline which saw the price of 5.3600 hit only a couple of days later.
Choosing a speculative direction for the USD/BRL remains difficult for short-term endeavors, but traders who want to wager on the potential for downside momentum being temporarily generated cannot be faulted. However, conservative traders may want to see the 5.5900 support level punctured first, meaning that limit orders seeking momentum may be the best method to trade. If a trader places a sell order near the 5.5800 juncture and seeks targets below with a cautious stop loss placed nearby, this may produce a worthwhile result if a short-term trend can be captured.
Brazilian Real Short-Term Outlook:
Current Resistance: 5.6800
Current Support: 5.5950
High Target: 5.7500
Low Target: 5.5100
