After breaking the important 5.3000 resistance level in the middle of last week and demonstrating an ability to sustain values above the ratio, the USD/BRL has created more upwards momentum. The USD/BRL is now trading within sight of highs touched in early May of this year, and it should be noted the values seen in the first week of May were achieved as the Forex pair was coming off loftier values.
Before going into the weekend, the USD/BRL touched the 5.4600 juncture and then experienced a slight reversal lower. However, it is important to note the velocity of the trading the USD/BRL experienced as it went into the weekend. Buying was fast and strong and when the USD/BRL broke above the 5.3500 level it experienced another surge higher. Additionally, on the 19th and 20th of August, upon opening for trading, the USD/BRL gapped higher both times. The gaps upward are a potential signal that financial institutions are maybe buying the USD/BRL hoping it does not escape their grasps, and they may be worried about higher moves to come.
The USD/BRL is near the 5.3770 level and its opening today should be monitored by traders carefully. If the 5.36000 support level proves durable in early trading today, it may be a sign that additional buying momentum could creep into the Forex pair. The 5.4000 level looks tantalizingly close for traders who may decide this is the best spot to aim for with quick buying positions, but speculators need to keep their expectations from being overly greedy.
Yes, the momentum within the USD/BRL is intriguing and it has been able to create a rather attractive surge higher. However traders, are reminded that the USD/BRL has a rather durable history of producing slight reversals too, which can challenge short-term ambitions. Conservative traders may want to consider being buyers on slight downturns.
The junctures of 5.3600 to 5.3500 do look like potentially adequate places to go long the USD/BRL if some quick bearish action is seen within the Forex pair today. The 5.3300 level based on recent trading looks like a rather interesting stop loss ratio. Certainly speculators need to also calculate the amount of leverage they are using in order to practice distant stop losses, which can carry significant monetary risks if they are not adequately chosen.
Brazilian Real Short-Term Outlook:
Current Resistance: 5.4030
Current Support: 5.3500
High Target: 5.5010
Low Target: 5.3100
