USD/BRL: Bullish Reversal Resists Bearish Trading Sentiment

The USD/BRL has once again proven it refuses to remain correlated to other major Forex pairs as a bullish reversal has taken hold.

Since reaching a low water mark of nearly 5.1900 on the 7th of May, the USD/BRL has consistently proven that support remains durable and, in fact, has shown an inclination to incrementally increase. The USD/BRL has again proven it is often resistant to major correlations in global Forex. But before traders give us their bearish perspectives which they may have been testing since late March, they need to accept the notion that the USD/BRL remains a speculative opportunity because of its tendency to produce head-scratching results.

The USD/BRL has seen an increase in its resistance levels short term, but the value changes within the Forex pair actually remain polite. On the 18th of May, the USD/BRL was trading near the 5.2200 juncture and was certainly within sight of important support levels, but the bounce higher ultimately saw the 5.3200 juncture tested the following day. Before going into the weekend, the USD/BRL did traverse slightly lower early on Friday to around the 5.2600 ratio, before finishing the day near 5.3600.

The USD/BRL remains a speculative Forex pair for traders who have solid risk-taking management capabilities. As the USD/BRL prepares to open for this week of trading it is certainly near intriguing resistance levels, but the question is if they can prove durable. The last time the USD/BRL sincerely traded above its current values was on the 5th of May, and this occurred after the Forex pair climbed to a high of nearly 5.4800 the day before.

While bullish momentum since the end of the first week of May has seemed to be the flavor of choice for the USD/BRL, it has actually produced plenty of choppy trading in both directions. This may give impetus to short-term USD/BRL traders who stubbornly want to pursue the potential of bearish price action to raise its tentacles and prove that the Forex pair has the capability to traverse lower again.

Selling the USD/BRL even as it has shown a legitimate bullish trend short term may actually be the best speculative wager. Cautious traders may want to see an additional move higher before trying to short the USD/BRL. However, if resistance levels near the 5.3750 to 5.3950 junctures appear to demonstrate an adequate brace, pursuing reversals lower could potentially be profitable in the USD/BRL.

Brazilian Real Short-Term Outlook:

Current Resistance:  5.3950

Current Support:  5.3140

High Target: 5.4400

Low Target:  5.2650

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.