USDMXN Outlook & Technical Analysis for binary options
The USDMXN explodes into a bullish trend following an increase in demand for the Greenback, as shown on the USD Index chart.
A continuous rise in the coronavirus cases, which has resulted in the shutting down of public places across the globe, makes the USD a haven currency.
Should we expect a further advance in the sudden surge in the price of the USD to Mexican Peso? Come along as we carry out a top-down analysis of this volatile pair while touching on some key macroeconomic indicators.
Mexico Consumer Price Index (CPI)
CPI is a major index used in determining the change in inflation and purchasing sentiment.
The CPI evaluates the change in the price of goods and services, with the consumer’s perspective in mind.
A lower than expected data is rated bearish for the currency, whereas a bullish view can be supposed for the currency when data interpretation is higher than the foreseen description.
The latest data released on March 09 indicates that a bearish outlook expected for the USD as the actual reading is 0.42%, the previous reading is 0.48%, and the forecast data value is 0.29%.
U.S. Philadelphia Manufacturing Index
Philadelphia’s Federal Reserve Manufacturing Index, which is gotten from data compiled from a poll of roughly 250 manufacturers in the Philadelphia Federal Reserve district, evaluates the comparative level of prevailing business stipulations in Philadelphia.
A level on the index greater than zero indicates developing conditions; below symbolizes worsening conditions.
A lower than expected data is rated bearish for the currency. In contrast, a bullish sentiment can be expected for the currency when readings from data are more leading than expected reading.
USDMXN Technical Analysis
USDMXN Long-term Direction: Bullish Correcting
The USD vs. MXN traded within the 02 Jan ’17 and 03 Jul ’17 range for about thirty-seven months, forming alternating bullish and bearish closing candlesticks, a market structure that’s great for mean reversion trading strategy.
Experienced traders understand that, no matter how long a market range lasts, it will burst out of the channel and into a trend.
The exit of the sideways market was triggered by a rapid surge in the price above the 19.02762 resistance level on 01 Jan ’20 and continued beyond the 02 Jan ’17 threshold.
At press time, the Mexican Peso suffered a continuous battery that sent it soaring above the 12.3% from the 02 Jan ’17 high.
Coming down to the weekly time frame, we identify a regular bullish divergence formation on 17 Feb ’20 that gave a timely confirmation of the bullish thrust upon breaking above the 200-MA on 24 Feb ’20 and enters the overbought area at press time this week.
USDMXN Mid-Term Projections: Strong Bullish Thrust
Daily Time Frame
The Mexican Peso could not drive the exchange rate lower on 04 Mar ’20 as the bulls found support on the MA-200 from a daily chart perspective.
Bullish momentum continued after the bullish support and increased for about 26.16% before slowing down upon signaling a bearish divergence on the 1hour time frame of the USD Index.
H4 Time Frame
The regular bearish divergence from the above 4hour time frame could not stand the test of time as the bulls forced the USDMXN exchange rate above the 12 Mar ’20 04:00 resistance.
Upon triggering a golden cross of the stochastic oscillator and crossing above the level-50, the headed for the overbought area for an increase of about 8.45% before exiting the zone at press time.
A regular bearish divergence setup is anticipated on the daily chart of the USD Index. With that said, we expect US binary options traders to start scaling out of their open long trades or perhaps activate some form of tight trailing stop order behind their deals as we advance into the next week.