The USD/BRL has maintained a rather consolidated range the past week and, intriguingly, it has been able to maintain its rather bearish values. Since reaching highs on 8th of March near the 5.8700 juncture, the USD/BRL has incrementally seen downward momentum. This fight for bearish values within the Forex pair has not come without a struggle and the USD/BRL remains challenging to trade.
However, the rather tight value band displayed within the USD/BRL the past week underscores that resistance levels have proven rather adequate the past handful of days. The USD/BRL is near the 5.2700 mark currently and did test resistance near the 5.3340 juncture yesterday. Traders who have been pursuing the downward momentum of the USD/BRL may want to look at recent tests of support too and consider the mark of 5.2390, which has proven durable.
Incrementally, the past couple of days have seen a tendency to test resistance levels and then produce a slight reversal lower, but the consolidation within the USD/BRL may cause speculators to believe that a small breakout will occur. The question is if bearish momentum, which has been able to produce a rather solid trend the past two months, will endure, or if the USD/BRL may find a slight short-term bullish trajectory emerge.
From a risk/reward scenario, wagering against the two-month trend within the USD/BRL may prove to be unwise. There may be quick-hitting opportunities to seek value with buying positions if a trader places limit orders and activates their long positions when support levels are tested. However, the better speculative decision may be the pursuit of selling positions when resistance levels are approached. The junctures of 5.2900 to 5.3200 do look like intriguing ratios to try and sell the USD/BRL while using stop losses near the 5.3350 level. If the price of the USD/BRL should puncture resistance and sustain its value over the 5.3400 level it could be a sign that further bullish momentum may build.
If support near the 5.2400 to 5.2200 levels does start to look vulnerable, traders with bearish sentiment may target lower values. However, during this recent consolidated range, which has developed within the USD/BRL, it has been hard for the Brazilian real to trade below these marks.
The low water level of 5.1900 should be kept in mind; if somehow this juncture is punctured, it could mean stronger bearish sentiment is going to increase. Until then, USD/BRL traders should be content with relatively small moves from the Forex pair while using limit orders to take advangtage of the consolidated range.
Brazilian Real Short-Term Outlook:
Current Resistance: 5.2930
Current Support: 5.2480
High Target: 5.3340
Low Target: 5.1900
