USDMXN Outlook & Technical Analysis for Nadex
- 1 USDMXN Outlook & Technical Analysis for Nadex
- 1.1 Introduction
- 1.2 Fundamentals: Mexico PESO
- 1.3 USDMXN Technical
- 1.4 Conclusion
The USDMXN has moved about 1.83% this week on Nadex trading platforms to favor the US dollar following a negative release of GDP data on July 31 ’19, amongst significant technical price patterns.
Let’s take a closer look at the numbers involved GDP data and technical patterns driving the pair to recent highs.
Fundamentals: Mexico PESO
Mexico’s GDP YoY has been in decline from 2.6% on August 24, 2018, to -0.7% in July 2019. The upcoming GDP to be released on August 23, 2019, second quarter is forecast at same -0.7%. A significant change in the actual data reading from the previous will increase volatility in the USDMXN.
A further decline in GDP readings is bearish for the Mexican Peso, while an increase in the GDP readings above zero will indicate bullish sentiment for the MXN.
U.S. Existing Home Sales
The Existing Home Sales index is used to determine the strength of the U.S. housing market and is a significant indicator of the overall U.S. economic strength. Existing Home Sales measures the difference in the annual figure of existing residential buildings traded during the previous month.
When the reading is greater than anticipated, it should be considered as a positive sentiment for the USD, whereas a less than anticipated reading should be seen as bearish for the currency.
Latest data released on July 23, the previous reading was 5.36M while actual reading was 5.27M. The forecast was pegged at 5.35M, indicating a positive inclination for the currency.
USDMXN Long term Projection: Bullish Swings
USDMXN Monthly Chart
Let’s start with the above monthly time frame, illustrating the USDMXN hovering within resistance and support levels at 20.65754, and 18.74043. These levels were established by a breakdown of bullish accumulation on January 01 ’19 for a halted bearish swing, followed by bullish signals on May 01 ’19 and recently a breach of selling resistance on July 01 ’19.
The USDMXN is also enclosed within a symmetrical triangle, as the price forms lower highs on June 01 ’18 and January 01 ’19; higher lows on August 01 ’18, March 01 ’19 and July 01 ’19.
The price heads towards the 20.65754 resistance. To do that, the lower time frames will have to signal similar breakout patterns.
USDMXN Weekly Chart
A view from the weekly time frame reveals a transition from bearish sentiment on July 08 ’19 to bullish sentiment on July 27 ’19, with support fixed at 18.96240. The breakout of bearish resistance (19.36438) on August 05 ’19 highlights an increase in buying power and consequently bringing the dollar to pesos rate to a high of 19.84.
So far the exchange rate of the Mexican peso has increased by 2.5% from the breakout point, and 4.5% from the switch in polarity on July 22 ’19.
USDMXN Medium Term Projections:
Daily Time Frame
Referring to the daily time frame, we observe an increase in buying pressure on July 30 and 31, similar to that of the weekly time frame. The bullish price patterns on these dates reinforce upbeat confidence and drive the price upwards by about 4.5% at press time.
The recent breakout of hidden bearish resistance on August 19 also appears to be overbought and should be viewed as a signal to take some profit off the table while w wait for new bullish setups at new lows.
Accumulation of buyers on August 14 ’19, combined with a breakout of resistance 19.36963 on the weekly time frame led to a 2.5% rise in the exchange rate of the USDMXN.
Another break resistance, this time on the 4hour time frame above confirms an end to the price correction and a chance to scale up the bullish position by 1.2% on August 16 ’19 12:00.
USDMXN Short Term Projections:
USDMXN 2HR Intraday Chart
Lastly, at the intra-day level, it’s been a rollercoaster with bearish and bullish swings on the 2hour time frame. The USDMXN exits the overbought level twice on August 05 and August 12 ’19, as bearish setups are triggered by a collapse of bullish support on August 05 and 07.
Signals to enter long positions were flagged on August 11 and 14 as a breakout of selling resistance, not forgetting the accumulation of buyers on August 16 and bear trap on August 19 02:00.
The USD grows stronger against the Mexican Peso starting from a release of the macroeconomic indicator Gross Domestic Product. As we look forward to another release of the same fundamental indicator on Friday, August 23, we lookout for bearish signals on the daily chart of the USDMXN.
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