USD/MXN – US Dollar Poised for Major Chart Breakout vs Mexican Peso
- USD/MXN macro-triangle nearing the apex and thus a breakout
- Higher or lower> Just follow the break and go from there…
It may not be long before the US Dollar undergoes a massive breakout versus the Mexican Peso. For nearly three long years USD/MXN has been undergoing a contraction in price swings that is resulting in a macro-sized triangle.
The coiled-up nature of the chart is unsustainable and suggests that at the very least we see a substantial pick-up in volatility. It might not be a clean breakout, but it looks like traders need to be ready and geared up to take advantage of more fertile trading conditions.
From a tactical standpoint, will initially run with whichever way USD/MXN breaks, using the August swing-high 20.2561 as bullish confirmation and the October low of 19.0176 as bearish confirmation. Based on the broader trend (up), a top-side resolution is seen as the most likely outcome.
Based on the size (height) of the formation, a substantial move of 4 full points could develop, that is ~24 on the upside or 15 on the downside.
While the majority of traders won’t be looking to hold for the duration of the trade, given it could be measured in years, a trading bias can still be used to determine short-term maneuvers – i.e. long bias look for short-term bullish consolidations or pullbacks to support on the daily/4-hr time-frame, and vice versa for shorts.
Trading Forecasts and Educational Guides for traders of all experience levels can be found on the DailyFX Trading Guides page.
USD/MXN Weekly Chart (massive wedge nearing apex)
USD/MXN Daily Chart (watch confirmation levels)
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---Written by Paul Robinson, Market Analyst
You can follow Paul on Twitter at @PaulRobinsonFX
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.