Dollar vs Mexican Peso Price Outlook: USD/MXN Rally to be Short Lived
Mexican Peso Technical Price Outlook: USD/MXN Near-term Trade Levels
- Mexican Peso updated technical trade levels – Daily & Intraday Charts
- USD/MXN five-day decline rebounds off technical support
- Risk for topside exhaustion ahead of 23.1089 – key near-term support 22.1495
The US Dollar rallied more than 1% against the Mexican Peso since the start of the week with USD/MXN rebounding off confluence technical support early in the session. The reversal threatens a larger recovery but keeps price with the confines of the broader downtrend and we’re looking for a reaction just higher. These are the updated targets and invalidation levels that matter on the USD/MXN technical price charts. Review my latest Weekly Strategy Webinar for an in-depth breakdown of this Peso trade setup and more.
Mexican Peso Price Chart – USD/MXN Daily
Technical Outlook: In my last Mexican Peso Price Outlook we noted that the price advance was, “testing resistance at the monthly range highs,” with the 38.2% retracement of the March decline just higher at 23.1089. A breach above the June opening-range highs attempted to breach this threshold for two consecutive days but failed to close above. A decline of more than 4% off that mark rebounded early this week off a key support zone at 22.0376/1503 – a region defined by the 2017 swing high, the 61.8% retracement of the June range and the 50% retracement of the broader yearly range.
A break / close below is needed to mark resumption towards the June lows and more significant Fibonacci support confluence at 21.2317/2941. Daily resistance stands at 22.8179 backed by the July open at 22.9773- broader bearish invalidation remains steady at 23.1089.
Mexican Peso Price Chart – USD/MXN 120min
Notes: A closer look at Peso price action shows USD/MXN trading within the confines of a descending pitchfork formation – note that the median-line converged on the June open / 61.8% retracement at 22.1348/1495 into the open of the week. Initial resistance now stands at 22.6908 backed by 22.8176 & 22.9425 – both levels of interest for possible topside exhaustion IF reached. Initial support rests with the weekly open / 50% retracement at 22.3435/3853 with a break of the weekly opening range low needed to shift the focus lower again.
Bottom line: The USD/MXN rebounded off key support early in the week and the recovery may have more upside near-term. From a trading standpoint, look to reduce long-exposure / raise protective stops on a stretch toward the upper parallel - be on the lookout for possible topside exhaustion near downtrend resistance IF price is indeed heading lower.
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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--- 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.