Mexican Peso Forecast: Bears Lose Control as USD/MXN Threatens to Break Above Key Resistance
USD/MXN Technical Forecast: Neutral
After a crazy week in markets due to large volumes of retail traders piling to the market, USD/MXN remains stuck in its attempt to push lower and seller exhaustion is starting to creep in.
USD/MXN Weekly Chart
The Weekly chart shows how USD/MXN has been unable to hold below horizontal support at 19.87, highlighting that the 200-week moving average has been of increased importance to keep bearish pressure from building since price initially bounced off it at the end of November.
Back in December, I highlighted the existence of three dominant trendlines in the USD/MXN Weekly chart, and current price action is using the upper trendline as an area of resistance. This past week’s high at 20.45 saw rejection at the descending trendline, enforced by the 20-week and 100-week moving averages, which are now converging. This possible bearish cross may be signaling that further selling pressure will come into the market as price has consolidated over the past few weeks.
USD/MXN 4-hour Chart
Looking at the 4-hour chart, there seems to be significant short-.term support at 20.20 and the formation of a rising trendline which may keep prices heading higher, although the wider descending trendline is in short range. A fall below the 20 mark may see a new round of selling pressure, but a fresh attempt to break below 19.87 is going to need increased downside momentum to keep sellers in control. The low seen on January 21st (19.54) is likely to be a strong support area before sellers target 19.14
--- Written by Daniela Sabin Hathorn, Market Analyst
Follow Daniela on Twitter @HathornSabin
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