On Friday of last week, the USD/MXN demonstrated its ability to climb higher and hit the 20.60000 mark. The high level was last tested just before Christmas, when holiday trading volumes were scarce, and it actually last traded above the 20.60000 juncture during the second week of November. However, the USD/MXN is still safely within the depths of its long-term bearish trend.
The USD/MXN yesterday showed it has the ability to reverse lower and the move has continued early today as the Forex pair is beginning to trade near important support levels. If the current short-term support junctures of 20.18000 to 20.16000 prove vulnerable, it may signal that the USD/MXN is about to reestablish its lower value range. Technically, the 20.19000 mark on a six-month chart looks important because it would reestablish an important trend line.
Cyclical moves higher have certainly haunted speculators of the USD/MXN who have kept their bearish sentiment in place. The past month of trading saw resistance brushed aside and support levels prove strong as short-term bullish momentum gathered strength. However, Friday’s highs might be viewed as an apex by speculative traders.
Today’s trading in the USD/MXN will be important, and if the value of the Forex pair can be sustained near the 20.20000 juncture and exhibit that it can be penetrated lower, bearish trading perspectives may be ignited. The past week of trading has seen a large dose of risk-averse trading take place in the broad global markets. Cautious sentiment permeated equity indices, and this seems to have had an effect on Forex.
However, the long-term trend of the USD/MXN remains intact, and it is a viable possibility that a resurgence of risk appetite may be generated globally. Cyclical moves higher are a natural part of Forex and need to be anticipated by traders with the use of solid risk management decisions regarding stop losses and proper amounts of leverage being practiced.
Selling the USD/MXN is a speculative trade, but one that takes into consideration the potential for the Forex pair to reestablish its long-term bearish trend. Cautious traders may want to see slight moves higher and resistance levels to be tested in order to activate their positions. Going short the USD/MXN within the 20.25000 to 20.30000 junctures has speculative appeal short term.
Mexican Peso Short-Term Outlook:
- Current Resistance: 20.31000
- Current Support: 20.16000
- High Target: 20.07000
- Low Target: 19.85000
