USD/BRL: Flirtation with Key Support Levels Growing Intense

The USD/BRL continues to show an ability to traverse within sight of crucial support junctures, but as of yet has not punctured lower values.

The past few weeks of trading have produced a rather incremental bearish trend within the USD/BRL. The Forex pair is currently flirting with a crucial support level near values slightly above the 5.4000 which have not seen the light of day since the 24th of February. The past few trading sessions have seen the USD/BRL traverse near the 4.4500 ratio with tight cyclical reversals taking place. However, the inability to puncture the 5.4100 level remains intriguing for speculators.

Until the USD/BRL proves it can penetrate the 5.4100 to 5.3900 levels, the Forex pair remains a target for speculators who want to scalp. The past two days have seen the 5.4700 mark become a strong resistance zone too. The fact that the US Federal Reserve is making their FOMC policy statement later today could factor into USD/BRL trading, but the past two days have not seen any massive indicators that financial institutions making transactions in the Brazilian real are overtly nervous about US pronouncements.

Instead, the USD/BRL remains within the grasp of a strong technical perspective and the consolidated range being demonstrated opens the door for speculators.The USD/BRL is on the lower edge of its bullish territory and, if and when the Forex pair is able to puncture the 5.4000 value, it may create a shift in outlook. The question is if the USD/BRL realistically will begin to establish a lower price range, or if it will simply find its current price vicinity a place where support and resistance levels can be used for quick-hitting trades.

Until the USD/BRL is able to trade below the 5.4200 mark, traders may find that simply buying near this support level and looking for small moves higher can prove profitable. Yes, incrementally the USD/BRL has displayed an ability to lower its resistance levels the past week, but speculators who have been wagering on the Brazilian real long term may want to see more evidence of a downturn before they become optimistic about bearish momentum being able to become swift.

The USD/BRL has produced choppy results the past month and it is susceptible to reversals. The use of take-profit and stop-loss orders remains important and traders should monitor their positions closely. Cautious traders who believe short-term bearish momentum is the dominant feature of the USD/BRL may want to wait for slight moves higher and activate their selling positions near current resistance levels.

Brazilian Real Short-Term Outlook:

Current Resistance:  5.4750

Current Support:  5.4300

High Target: 5.5050

Low Target:  5.3900

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.