USD/BRL: Higher Move to be Challenged Today by Speculators

Robert Petrucci

The USD/BRL will begin trading today near mid-term highs and speculators may feel enticed to wager on direction, but they should be careful.

When the USD/BRL begins to trade today it may experience a spike which is often the case with the currency pair.  Upon the return of U.S financial institutions today from their long holiday weekend, fuller trading volumes will certainly be experienced, and this could alter the behavioral sentiment which has been seen in the USD/BRL the last two trading days momentarily.  

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The USD/BRL has been consistently moving higher since late May. The heights reached by the USD/BRL the past two days of trading are testing values not seen since early February of this year. It should be noted on the 4th of February the USD/BRL tested the 5.35000 juncture briefly.

The USD/BRL provides speculators with rather consistent trends, but they often prove to be volatile particularly when the Forex market is opening for trading. Spikes up and down are commonplace, and traders who are brave enough to hold positions of the USD/BRL overnight must be prepared for rather swift moves during the early hours of trading days.

Today’s conditions are likely going to prove rather volatile as increased transactions are delivered into the USD/BRL. The past two days of trading have seen new highs and the question is if there will be a slight selling correction this morning, or if the incremental steps higher will continue to flourish.

If the USD/BRL breaks above the 5.33000 level with relative ease this morning and sustains prices above in the ensuing hours it could point to additional higher values to come.  Traders who can use take profit ratios near resistance levels they perceive as durable may want to cash out of winning positions if they materialize.

The potential for a slight countermove lower early this morning, or later during the day when the USD/BRL is experiencing full volume should be anticipated. Traders who want to look for lower moves from the current heights of the USD/BRL should keep their targets realistic and not become overly ambitious. Support levels near the 5.31750 mark should be watched, choppy conditions were seen yesterday and a low of about 5.28690 was seen briefly.

Traders need to be prepared for rather fast trading in the early hours of the USD/BRL today. However, after the dusts settles and volatility eases, speculators may believe that wagers on incremental upside potential based on the mid-term bullish trend with quick hitting take profit orders may be worthwhile.

Brazilian Real Short-Term Outlook

Current Resistance:  5.3311

Current Support:  5.3147

High Target: 5.3399

Low Target:  5.2955

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.

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