USDMXN – Weekly Outlook- November 8 2019

USDMXN Outlook & Technical Analysis for binary options

Introduction

The USDMXN close to the 50-period Moving Average and a cluster of support levels on top US binary options trading platforms while at the same time signaling a divergence formation on the higher monthly time frame. If the support levels hold, we may see a price hike in the last quarter of ’19.

Let’s take a plunge into the significant news events and chart patterns driving the price of the USDMXN.

Mexico Retail Sales 

Consumer spending is one of the major indicators of the strength of the economy as it affects economic activity. One index that measures consumer spending is Retail Sales, which is a measure of variations in the total cost of inflation-adjusted sales at the retail level. 

 When data figures are higher than forecasted it is considered as negative for the Peso, while any reading lower less than expected should be taken as a positive sentiment for the MXN.

The latest data released on October 25 revealed the actual data to be 0.3%, while previous data was 0.0%. The forecast reading was 0.1%, showing a bearish expectation for the MXN.

U.S. Initial Jobless Claims

It is an appraisal of people that registered for unemployment insurance for the first time in the past week.  

When data figures are higher than forecasted, it is considered as negative for the USD, while any reading lower less than expected should be taken as a positive sentiment for the USD.

The latest data released on October 31 revealed the actual data to be 218K, while previous data was 213K. The forecast reading was 215K, signaling a bullish expectation for the USD.

USDMXN: Technical Analysis

USDMXN Long term Overview: Bullish Correction

Monthly Chart

USDMXN Outlook - Monthly chart - Nov 8 2019

As usual, we follow a top-down analysis approach to identify potential reversal patterns and levels on the USDMXN chart. 

Last month, the dollar to pesos exchange rate closed bearish, trading around the MA-50 support and the breakout support of August 01 ’19.  A price recoil back to the upside is expected at this level, for a stronger US dollar.

Weekly Chart

USDMXN Outlook - Weekly chart - Nov 8 2019

The weekly chart also shows a chance of the Mexican peso losing its grip on the Greenback as the pair trades within a cluster of bullish support levels.

The bullish engulfing candlestick pattern lends an earlier insight into a bullish price hike. A bullish closing price within the high/low range of the previous week may increase the exchange rate.

USDMXN Medium Term Projections: End of Bearish Swing

Daily Time Frame

Above on the daily time frame, the USDMXN makes a corrective ABCD pattern in a bullish harmonic pattern setting significant resistance levels at 20.25739 and 19.86202.

The bullish candlestick pattern on November 05 is a good entry signal to time the bottom into the bullish harmonic pattern illustrated below.

Failure of the 19.01728 support would nullify our bias hinged on a bullish rally.

4HR Chart

Although the 4hour time frame appears to be in a range-bound market formation, we notice a rejection of resistance levels on October 28, 09:00, and November 04 at 10:00.

A bullish closing bar above the recent bearish inside-bar candlestick pattern will point to a further increase in the price to favor the USD.

Conclusion

The technical levels show more of optimism towards a stronger Greenback and a weak Mexican Peso in the coming months. If this holds true, we look forward to a price projection of 20.16605 towards the end of the year.

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