The USD/BRL has continued to produce incremental selling. Yesterday’s finish near the 5.7130 was another solid accomplishment for the bearish trend. However, Monday’s results have to be looked on with suspicion since U.S financial institutions were largely absent from Forex because of the Presidents’ Day holiday. However, the USD/BRL did produce selling on Friday and sustained the lower realms going into this past weekend.
Tranquility among financial institutions has certainly factored into the USD/BRL over the past couple of weeks as large traders may have determined that the worst of the rhetoric is known and business can now move ahead without too many hurdles. Day traders who want to pursue the potential of further erosion in the USD/BRL should be careful nonetheless.
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5.7000 Ratio as Target for Speculators
Because of yesterday’s light trading, speculators should expect some early fluctuations in the USD/BRL as financial institutions balance their accounting upon the return of North American ordering. Day traders should be on the lookout for a potential gap early this morning. Intriguingly, the USD/BRL did open with higher ratios yesterday and tested the 5.7250 vicinity but then produced selling and retested lows around 5.6950.
As always in the USD/BRL traders need to be mindful of the wide spread which exist in the currency pair because of a lack of large volumes. Traders need to use entry orders to receive a fill they want to work with to pursue the USD/BRL. Using entry orders does mean patience is necessary and this is a good characteristic for day traders to acquire. The thrill of trading feels good via instant gratification, but it is a better approach to pursue the USD/BRL with an experienced wary eye.
Near-Term Considerations for the USD/BRL
The lower trend in the USD/BRL has been solid, but support levels will certainly remain a challenge to prove vulnerable. The 5.7000 realm looks like a logical goal, but cautious traders may want to wait for the potential of slight upwards price action to launch a selling position in order to look for a reversal lower – this if a trader feels confident resistance is also durable.
- Economic data from the U.S will be relatively light and financial institutions are certainly going to remain focused on their outlooks, which are being generated via behavioral sentiment as they consider Donald Trump and Lula da Silva.
- The USD/BRL is now touching value it last traversed on the 7th and 8th of November, Trump won the U.S vote on the 5th of November.
- Looking for lower prices near 5.7000 to 5.6800 may be legitimate, but risk taking tactics should be used wisely.
Brazilian Real Short Term Outlook:
Current Resistance: 5.7190
Current Support: 5.7100
High Target: 5.7270
Low Target: 5.6910
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