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Dollar vs Mexican Peso Price Outlook: USD/MXN Range Breakout Imminent

Dollar vs Mexican Peso Price Outlook: USD/MXN Range Breakout Imminent

2020-08-10 18:30:00
Michael Boutros, Strategist
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Mexican Peso Technical Price Outlook: USD/MXN Near-term Trade Levels

  • Mexican Peso updated technical trade levels – Daily & Intraday Charts
  • USD/MXN contracting into August opening-range- multi-month trendline resistance
  • Risk for topside exhaustion sub-23.1089– key near-term support 22.0769

The US Dollar is fractionally higher against the Mexican Peso early in the week with USD/MXN rallying 0.47% into the open. Price continues to consolidate within the broader June range with a breakout imminent over the next few days. 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.

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Mexican Peso Price Chart – USD/MXN Daily

Mexican Peso Price Chart - USD/MXN Daily - Dollar vs Mexican Peso 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, USD/MXN was,”contracting within the monthly opening-range and we’re looking for the breakout to offer guidance.” A brief stint below the July range lows late in the month reversed sharply higher with price failing to close above confluence resistance at the 61.8% retracement of the late-June decline at 22.7152.

The move keeps USD/MXN within the confines of the June trading range - a break / close below trendline support (purple) needed to mark resumption of the broader downtrend towards the median-line. Key resistance / bearish invalidation now lowered to 23.1089.

Mexican Peso Price Chart – USD/MXN 120min

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

Notes: A closer look at Peso price action shows USD/MXN trading within the confines of an ascending pitchfork formation extending off the July lows. Weekly open support rests at 22.3643backed by the 61.8% Fibonacci retracement / August open at 22.2548/89. A break / close below the lower parallel / 22.0769 will be needed to mark resumption with such a scenario exposing 21.8897 and the 100% extension at 21.8215.

Initial resistance 22.6044 backed by 22.7152 – look for a larger reaction there IF reached with a topside breach keeping the focus on 22.8983 and the 38.2% retracement of the decline off the yearly highs at 23.1089.

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Bottom line: USD/MXN is in a near-term consolidation just below multi-month slope resistance – the immediate focus is on a break of the monthly opening-range for guidance. From at trading standpoint, the late-July recovery remains vulnerable – be on the lookout for topside exhaustion ahead of 22.7152 IF price is heading lower with a break below the lower parallel needed to mark resumption.

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 - Weekly Event Risk

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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.

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