USDMXN – Weekly Outlook- April 16 2020

USDMXN Outlook & Technical Analysis for binary options

Introduction

There’s an increase in demand for the Mexican Peso in the last couple of weeks as the bulls take profits off the USDMXN. 

We expect to see an extension of the bearish trend in the coming week.

 Let’s move on to analyze the charts and understand the key patterns at play.

Mexico GDP

It is one of the most comprehensive ways of determining the level of activity in an economy, including the strength and shape of a countries economy.

GDP is an evaluation of the change or the difference in the inflation-adjusted value of all goods and services generated via the country’s’ economy annually. 

A reading higher than anticipated means bullish for the currency. In contrast, a reading less than expected means bearish for the Mexican Peso.

Data released most recently on February 25 suggests that a bullish sentiment is imminent for the MXN as the previous reading is -0.3, while forecast reading is -0.4%, while the actual reading is -0.50%.

U.S. New Home Sales

The New Home Sales report is an evaluation of the number of fresh single-family homes traded in the previous month. The New Home Sales index is an annualized report and appears to have more impact when published before the Existing Home Sales report since both reports are tightly correlated.

A reading higher than anticipated means bullish for the currency. In contrast, a reading less than expected is seen as bearish for the U.S. dollar.

Data released most recently on March 24 suggests that bullish sentiment is imminent for the USD as the forecast reading is 765K, previous readings read 800K, while the actual reading is 750K.

USDMXN Technical Analysis

USDMXN Long-term Direction: Bullish Breakout

Monthly Chart

USDMXN Outlook - Monthly Chart - April 16 2020 -

Resistance: 25.77820, 22.03770, 19.65913

Support: 17.44984, 18.53350

RaceOption Traders and investors find refuge in the Greenback, following a collapse in the stock market from the ongoing coronavirus pandemic.

A monthly chart overview reveals a bullish engulfing pattern on 10 Feb ’20 after a Doji candlestick formation set on 01 Jan ’20. The engulfing formation fixed significant support at 18.5335, fueling an explosion to the upside.

The pair trades below the monthly open price after last week’s close showing a slowing of bullish momentum. Now might be a good time to lock in some profits, or perhaps activate some form of trailing stop order.

Weekly Chart

USDMXN Outlook - Weekly Chart - April 16 2020 -

Resistance: 25.77820, 19.65913, 18.82790

Support: 18.5225, 19.15094

An exit of the stochastic overbought area was confirmed by a bearish engulfing candlestick pattern, showing that the USDMXN may be entering a correction phase.

At this point, timing is of the essence when entering a short sell position considering that the markets are highly volatile this period.

USDMXN Mid-Term Projections: Strong Bullish Thrust 

Daily Time Frame

USDMXN Outlook - Daily Chart - April 16 2020 -

Resistance: 25.7782, 24.7841

Support: 19.9416, 20.2969, 22.836

After a hidden bullish divergence pattern, the bulls forced the USDSGD price higher by 12.88% but could not close beyond the 25.44741 resistance.

A regular bearish divergence was later signaled after a bearish candlestick pattern on 08 April ’20 and a death cross of the stochastic indicator, confirming the bearish engulfing candlestick structure on the weekly chart.

4Hour Time Frame

Resistance: 25.77820, 25.44741, 24.78380 

Support: 22.8360 

A bull trap candlestick formation was confirmed after an opposing bearish engulfing pattern setting high at 25.77820.

Conclusion

The world reserve currency (US dollar) still serves as a haven against uncertainties that comes with the coronavirus outbreak, as  traders and investors around the globe would rather have their funds saved till the market crash slows down.

To wrap up the analysis, we maintain a bullish outlook in the long term going forward. However, the shorter-term time frames suggest a bearish trend into the first half of the week.

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