USD/MXN – US Dollar Quiet on Major Support vs Mexican Peso
- USD/MXN big-picture triangle triggered last month
- Sitting on the 2019 low at 18.74, no buyers (or sellers) yet
- A drop through to confirm breakdown, else could be a fake-break
USD/MXN has been unusually quiet the past few weeks since breaking down out of a long-term triangle pattern. Given the size and duration of the formation (extending back to early 2017), the breakdown could become a serious threat to the downside.
But before sellers can gain traction, the 2019 low at 18.74 needs to be broken. USD/MXN has been trading on this support level for the past week, but again as said already, the price action is unusually quiet, so and a make or break situation is brewing.
A decline below 18.74 will confirm the December breakdown through the underside trend-line of the triangle, and could very well start ushering in a much stronger move and increased volatility. The next level to watch below 18.74 clocks in around 18.40, then the 2018 low near 17.93.
On the flip-side, a hold here of support and reversal could set into a motion a squeeze higher that ends up negating the bearish break in favor a bullish one at some point. To accomplish this, USD/MXN will need to rally beyond 20 to turn the bearish break into a fake one. More on this later should it come to fruition.
For now, patiently waiting to see if 18.74 can break following this period of unusually tight trading conditions. It shouldn’t be much longer before we see a resolution of some sorts.
USD/MXN Weekly Chart (bearish break in place)
USD/MXN Daily Chart (18.74 is a big level)
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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.