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Dollar vs Mexican Peso Technical Outlook: USD/MXN Coil Continues

Dollar vs Mexican Peso Technical Outlook: USD/MXN Coil Continues

2020-05-04 18:00:00
Michael Boutros, Strategist
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Mexican Peso Technical Price Outlook: USD/MXN Near-term Trade Levels

  • Mexican Peso updated technical trade levels – Weekly & 240min Chart
  • USD/MXN continues to coil within the April range- break to offer guidance
  • Risk for a deeper correction while below 25.3556.

The US Dollar snapped a two-week rally against the Mexican Peso last week and keeps price within a broad multi-week consolidation pattern just below the record highs. While the broader outlook remains constructive, the dollar remains vulnerable while below this threshold as we head deeper into May trade. These are the updated targets and invalidation levels that matter on the USD/MXN technical price charts. Review my latest Strategy Webinar for an in-depth breakdown of this Peso trade setup and more.

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Mexican Peso Price Chart – USD/MXN Weekly

Mexican Peso Price Chart - USD/MXN Weekly - Trade Outlook - Technical Forecast

Chart Prepared by Michael Boutros, Technical Strategist; USD/MXN on Tradingview

Technical Outlook: In my last Mexican Peso Price Outlook we noted that the broader USD/MXN advance was vulnerable after reversing off critical resistance at the 200% extension at 25.5466 and to be, “on the lookout for topside exhaustion while below the upper parallel with a break below up-slope support needed to shift the focus lower.” The peso plummeted more than 6.5% off the late-April high before rebounding sharply with price closing down just 1.49% last week.

Initial weekly support rests with the April open at 23.6988 backed by the high-week reversal close at 23.3375- ultimately a close below is needed to suggest a larger correction is underway. Key resistance steady at 25.4474/5466.

Mexican Peso Price Chart – USD/MXN 120min

Mexican Peso Price Chart - USD/MXN 120min - Trade Outlook - Technical Forecast

Notes: A closer look at Peso price action shows USD/MXN continuing to trade within the confines of the descending pitchfork formation we’ve been tracking off the monthly high. Price turned just ahead of the upper parallel / April 24th close at 24.9658- now near-term bearish invalidation. Initial resistance at the record high-day close at 24.6147 with subsequent support objectives eyed at the 61.8% retracement at 24.1162 and the March trendline just above the 78.6% retracement, near the 24-handle- look for a larger reaction there IF reached for guidance.

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Bottom line: The recent USD/MXN turned just ahead of near-term downtrend resistance early in the week and the focus remains on a reaction at trend support. From a trading standpoint, look to reduce short-exposure / lower protective stops on a test of Fibonacci support with a break / close below 23.9074 needed to keep the focus lower in the dollar.

For a complete breakdown of Michael’s trading strategy, review his Foundations of Technical Analysis series on Building a Trading Strategy

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Key US / Mexico Data Releases

Key US / Mexico Data Releases - USD/MXN Economic Calendar - Dollar / Peso Event Risk

Economic Calendar - latest economic developments and upcoming event risk.

Active Trade Setups

--- Written by Michael Boutros, Technical Strategist with DailyFX

Follow Michael on Twitter @MBForex

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

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