USDMXN – Weekly Outlook- July 10 2020

USDMXN Outlook & Technical Analysis for binary options

Introduction

The sudden rise in the number of new cases in the USA and Mexico is of concern to BinaryCent investors, and the fear to lock down businesses and other sectors will severely cripple the economy.

Let us look into the trading platform different time frame charts for technical analysis of the news effects.

Fundamentals 

Mexico Fundamentals 

The Mexican PMI report shows that there is a reduction in the industrial activities for the fourth time in the Junes report that was released. The Mexican central bank did reduce her interest rate by 50bps to 5%, the lowest since 2016 September citing growth concerns and an uncertain outlook amid the coronavirus outbreak.

At publication time, the WHO reported 261750 cases of Coronavirus in Mexico since the epidemic had been confirmed, and 30639 reported.

The Mexican peso gained against the US dollar after the news of a potential coronavirus vaccine, and that of the oil price rise also.

U.S. ISM NON-MANUFACTURING PMI

The ISM data is a leading indicator of economic health because most managers have better insight into the company’s view of the economy.  From the survey carried out on purchasing managers and excluding the manufacturing managers, the relevant information is obtained about business conditions, new orders, prices, production, inventories, and others. 

An expansion in the industry will be from 50.0, while figures below show contractions in the system. 

The previous data of ISM that was released is 45.4, while the forecast is currently at 50.0. As we wait for the actual data to be released, if the outcome is more significant than the expected, it is suitable for the currencies, but if the outcome is lower, it is not suitable for the US currency.

USDMXN Long-term Direction: Bullish and Correcting

USDMXN: Technical Analysis

Monthly Chart

USDMXN analysis - Monthly Chart - July 10 2020

Monthly Resistance Levels: 25.77820, 23.2710

Monthly Support Levels: 21.4590, 19.6848, 19.0266, 18.64510, 18.40470 

As the new month unfolds, investors have specific questions in mind: What has the month got to offer from the trading platform?

Last month candle ended in a bullish shade after price was rejected at the low of the month, forming support at 21.4590.

As the bears push down the price in this early part of the month, it is not sure if they can close below the support or that zone is up for a retest.

Weekly Chart

USDMXN analysis - Weekly Chart - July 10 2020

Weekly Resistance Levels: 24.88850, 24.00, 25.78360

Weekly Support Levels: 21.49303, 18.539

The regular bullish divergence of 24 February 2020 that occurred on the support zone of 18.539 had kept the uptrend intact for weeks before USDMXN went into consolidation. 

Should all things being equal, the bulls trap that was developing on 22 June 2020 may lead to a price slump below the support level 21.49303, otherwise, if the bulls persist, we may see the bulls taking the price up.

However, there is a bearish swing that took the price down from the high of the hanging man and bearish accumulation resistance for some weeks. If the bears can take over the market, we may see the low of 21.49303 give way to expose the next support level of 18.539.

USDMXN Mid-Term Objective: Bearish Correction 

Daily Time Frame

USDMXN analysis - Daily Chart - July 10 2020

Daily-D1 Resistance: 23.22937, 23.79250, 25.29106, 25.78027 

Daily-D1 Support: 21.47390

The bullish and bearish divergence has been a major chart pattern guiding significant players in this trading platform. 

Sometimes on 6 April 2020, the Mexican peso gained against the US dollar after a bearish divergence took USDMXN down for days.

As of 8 June 2020, USDMXN found support at 21.47390, and a regular bullish divergence was confirmed with the stochastic, which rallied price up. The resistance zone of 19 May and 30 June 2020, respectively (23.79250, 23.22937), rejected the bull’s pressure.  

As at the writing of this report, USDMXN is pushed down, as we await the opening of a new trading week, we expect the price to break out from price range of 21.47390 support or 23.7950 resistance level.

4Hour Time Frame

4Hour Resistance Levels: 22.6290, 22.74268, 23.06060, 23.09520, 23.22937

4Hour Support Levels: 21.88350, 22.14890, 22.31750 

From the H4 chart above, we can see that the bulls surge to the upside started when price found support at the 22.14890 and 22.31750 levels. The US dollar did gain against the Mexican peso from 17 June till 30 June 2020 before price found resistance.

The resistance Levels of 23.22937 and 23.09520 confirmed the takeover of the bears from the bulls when the bearish engulfing candle gave the signal.

However, the bears were able to take the price back to the demand level, where the initial bullish trend started. 

In the coming hours, traders expect a ranging market between the resistance zone 22.74268 and the support zone of 22.14890 before a breakout to either side.

Bullish Scenario:

The possibility of another bullish rally on the daily time frame will be due to the bull’s strength on the H4 support level 22.14890.

Bearish Scenario:

We can expect a continuation of a bearish scenario on the H4 time frame from the trading platforms. This will be possible if the bears can close below the support zone of 22.14890.

Conclusion

The COVID-19 pandemic is still an issue of concern in most parts of the world. However, the recent positive data gotten from the major economy shows that there are improvements in different parts of the world.

In the coming days, we may see the US dollar make gains against the Mexican peso because of the support level. Should the US dollar weaken further, we may experience another bearish run or Mexican peso gain against the US dollar?

 

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