The USD/BRL continues to challenge speculators, but recent trading has now brought the Forex pair within proximity of important resistance. The important question for traders at this point is if resistance will prove durable or if the USD/BRL is about to test waters it has not traversed since late September through early November of 2020.
On the 8th and 25th of January, the USD/BRL did challenge highs it currently is trading near and failed to penetrate higher realms. This will cause speculators to wonder if the third time is the charm for bullish momentum. Brazil continues to be mired in a negative manner as coronavirus implications cause nervousness among financial institutions. However, the USD/BRL has proven resilient within this current value range before, so some traders may suspect that a move lower could develop, and they cannot be faulted for this perspective.
Resistance near the 5.5000 juncture is critical. If the mark is punctured higher and a test of higher value ensues, the USD/BRL will be within bullish territory it has not traversed since September, essentially. However, the choppy conditions of the USD/BRL are known to experienced traders. This dynamic creates a trading landscape which may appear highly complex, but it is actually fairly simple. One thing the USD/BRL has in its favor as a speculative asset is its rather tranquil value range, which allows conservative traders who use limited leverage the opportunity to pursue moves.
Traders should consider using limit orders and utilize current short-term support and resistance levels as places to launch positions. Cautious traders also may want to use momentum as an important tool technically near term while pursuing the USD/BRL. Allowing the Forex pair to break current nearby resistance first, then placing a buying order, or on the other hand, waiting for support to be broken and then placing a selling order, may be an alternative way to trade the USD/BRL.
Currently, the USD/BRL is trading near highs and, if value breaks short-term resistance above the 5.500 mark, it could prove a worthwhile buy. Speculators may choose to actually go long and consider the potential of the Forex pair challenging new highs above which were tested the last week of September.
Brazilian Real Short-Term Outlook:
- Current Resistance: 5.5000
- Current Support: 5.4100
- High Target: 5.5600
- Low Target: 5.3500
