USDMXN Rallying Towards Sell Zone, Pending Price Action for Entry
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The trend in USDMXN has been undeniably weak for pretty much all of this year so far, and while at a some point a meaningful rally with legs could develop, that doesn’t look likely to happen until we see more weakness first.
The current bounce has the look and feel of a correction, set to soon run aground into resistance. The first spot is just over 17.80, then beyond there we’ll look to 17.90 and the trend-line running down off the January high as well as the May high. It’s a relatively tight zone to watch for price action to turn bearish.
A rejection from the ~17.80/90 zone will be our cue to look for USDMXN to drop down into a zone extending from 17.16 down to 17.05. This is a pending set-up, and does require proper price action to pique interest from the sell-side. A reversal candlestick formation from resistance is the ideal. Once a turn lower has taken shape stops can be placed above the candlestick high. (On Thursday, we’ll be talking about trading candlestick formations at important price zones. Sign up here.)
Entry: Rejection from resistance (17.80/90, trend-lines)
Stop: Above rejection-bar high
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---Written by Paul Robinson, Market Analyst
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DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.