The USD/BRL continues to traverse need important mid-term highs, and may entice speculative positions from traders who think they know the Forex pair’s short-term direction.
The USD/BRL continues to trade within sight of highs the Forex pair made in the middle of April. As of this writing, the USD/BRL is trading a hair below the 5.6000 level. When the Forex pair opens for trading, speculators will need to look at one-year charts to contemplate potential resistance. The USD/BRL has seen a sincere bullish trend since the end of August when it was trading near the 5.1000 mark for a brief moment.
The upwards trajectory of the USD/BRL may cause a speculative debate among technical traders. While mid-term highs are certainly being challenged, the ability of the USD/BRL to correlate with other major Forex pairs needs to be considered. It is no secret the USD/BRL tends to trade in what appears to be its own vacuum compared to other major currencies for long durations, but it also has a habit of suddenly developing reversals which then mimic global conditions rather well.
While the USD has been strong across the Forex spectrum the bullish move within the USD/BRL has not been much of a surprise. However, technically in the broad Forex market, the USD has actually started to lose some strength, but up until now the USD/BRL has not reversed lower. Contrarian traders may be looking at the highs the USD/BRL is currently making and decide now is the time to go against the trend. This is always a dangerous endeavor.
If current resistance near the 5.6050 marks proves vulnerable momentum could carry the USD/BRL towards the 5.6400 ratio which would be a test of values seen in the second week of April. If this higher mark were to falter it could be evidence that an additional move upwards toward 5.7000 is possible. Traders should acknowledge the USD/BRL tends to move in a rather subdued manner, but its trends are rather remarkable. Stop loss protection is advised at all times.
However, there may be a handful of traders who believe the USD/BRL has climbed too high and the pair will begin to mimic other major currencies and produce some downwards momentum sooner rather than later. This would be going against the current trend in the USD/BRL, so traders who pursue selling positions are encouraged to use risk management astutely. If the current resistance levels of 5.6000 to 5.6100 prove durable, looking for lower values near the 5.5700 to 5.5500 ratios could prove a worthwhile wager.
Brazilian Real Short-Term Outlook
Current Resistance: 5.6050
Current Support: 5.5700
High Target: 5.6400
Low Target: 5.5300