The price range of 20.25000 to 20.56000 remains a ferocious short-term testing ground for the USD/MXN. Friday produced a strong surge towards higher resistance near the 20.69000 level, but the attack was quickly repelled with another drive towards lower support before going into the weekend. In early trading today, the USD/MXN is intriguingly sustaining its values near important support levels which have proven difficult to puncture.
However, this test of support has not faced a prolonged battle and the juncture of 20.20000 remains attractive as a target. The USD/MXN has been able to sustain a rather comfortable bearish trend and it remains intact. The question is if the Mexican peso can now build enough momentum short term to challenge the low water marks below, or if a speculative battleground will remain fought over within its current price range.
Traders looking for correlations from the broad markets to gain perspective should note that global risk appetite remains steady and is indicating it could produce optimistic results short term. US equity indices are traversing important highs and future calls from US stock exchanges are currently acknowledging that a positive opening will occur on Wall Street. With that notion in mind and the USD/MXN testing low water support levels, now may be the time to pursue further bearish movement for th Forex pair.
Traders may want to use resistance levels as stop loss ratios and sell the USD/MXN. The 20.00000 level remains a critical inflection point and likely a highly electric value for the Mexican peso. It is no sure thing that the USD/MXN will break below this value near term, but if it is challenged, programmed trading could set off a strong reaction which will test new lows, create big volatility and reversals higher swiftly.
Speculators looking to sell the USD/MXN should use take profit orders to capture strong movements which may see quick reflexive higher reversals. However, the trend of the USD/MXN appears to be tracking downward and if evidence is needed to prove this, technical traders should look at the sustained ability of the USD/MXN to keep its current values. After having enjoyed a solid bearish move lower which took the Forex pair from nearly 21.70000 on the 4th of November, the USD/MXN has shown little inclination to manage a sustained reversal higher, meaning more downward pressure may be anticipated.
Mexican Peso Short Term Outlook:
Current Resistance: 20.46000
Current Support: 20.20000
High Target: 20.57000
Low Target: 20.00000
