USDBRL showing more upside potential even though it has been losing upswings momentum as the rejection of resistance at 4.0180 levels.

But intraday swings show whipsaws on moving average and resistance at 3.9550 mark.

Even though the bears began pushing downwards we saw sharp bounces again, thereby dragonfly dojis are formed quite often, in between a hanging man patterns are also formed on rallies to show indecision in previous downswings ( see grey shaded rectangular area).

Leading oscillators are also moving in linear direction to signify indecision but slightly narrowed curve indicates reduced momentum in previous intraday selling pressures.

We now keep an eye on decisive breach resistance at 3.9575 levels, options straddle is the best suitable in such range bounded circumstances in short term.

So, go simultaneously long in 1W at the money call and put with 50% delta. Long options straddle that fetched unlimited returns during higher implied volatility scenarios, and limited risk to the extent of initial premiums paid options, well, this option trading strategies that are used when the options trader ponders that the USDBRL will experience significant volatility in the near term but expects the swings in either ways.

Alternatively, since we project the USDBRL outlook to reach 4.0 by year-end and 4.5 in 2016, the recommendation is to go long in 2M ATM delta +0.51 call,  and simultaneously short 2W (1%) OTM call for net debit.

The lower strike short calls to reduce the cost, this would help in purchasing of the greater number of long calls and the position is entered reduced cost.