USDMXN – Weekly Outlook- October 9 2019

USDMXN Outlook & Technical Analysis for binary options

Introduction

Trading the USDMXN on a regulated binary options platform such as Nadex can be rewarding if traders understand the technical price and chart patterns to pay attention to.

In this post, we’ll be taking a closer look at such technical and fundamental drivers of the USD vs. MXN exchange rate.

Mexico Consumer Confidence

The Consumer Confidence Index (ICC) of Mexico is a leading indicator that evaluates the current perception and the future anticipation of people the economy.

The index is based on a sample of 2336 homes distributed in the 32 major cities of the country calculated based on the purchase of consumption durable goods, perishable goods, inflation, employment, and savings. 

When the reading is higher than expected, we usually consider it as bullish for the Peso, while we consider a lower than expected index as bearish for the MXN.

The latest data revealed the previous reading to be 43.6, while the actual reading was 44.70. The forecast figure is 42.6, pointing to a bearish sentiment for the Mexican Peso.

U.S. Import Price Index MoM

The United States IPI (Import Price Index) evaluates the changes in the cost of imported goods and services that are bought domestically.

 When the reading is higher than expected, we usually consider it as bullish for the U.S. Dollar, while we consider a lower than expected index as bearish for the U.S. Dollar.

The latest data showed the previous reading to be 0.1%, while the actual reading was -0.5%. The forecast figure is -0.4%6, pointing to a bearish sentiment for the Dollar.

USDMXN Technical Analysis

USDMXN Long term Projection: Bullish Swings

USDMXN Monthly Chart

USDMXN Outlook - Monthly Analysis - October 9 2019

While hovering above the 50 periods Moving Average, the dollar to pesos chart flags a series of hidden bullish divergence patterns on November ’18 and on August ’19.

With the price establishing higher lows, we should expect a return of the upbeat trends. However, a failure of the bullish divergence trend line and the MA-50 may reinforce confidence to buy into the Mexican Peso.

USDMXN Weekly Chart

USDMXN Outlook - Weekly Analysis - October 9 2019

Following a transition from selling to buying pressure on July 22 ’19, the Greenback soared against the Mexican Peso by roughly 6.4% before plunging towards the MA-50 on September 02.

The MA-50 currently serves as significant support as the dollar to pesos bounce off the level. Last week’s bearish closing price, however, hints a drop in bullish momentum. A breach of the 19.38232 spinning top support may confirm a bearish move.

USDMXN Medium Term Projections: Bearish Swing

Daily Time Frame

USDMXN Outlook - Daily Analysis - October 9 2019

Coming down to the daily chart perspective, yesterday’s bullish inside bar price pattern hints weakness on the part of the bulls, and the USDMXN price may go either way from here. A daily rate close above the 19.59369 resistance or the 19.52374 support will serve as a pointer to the trend direction at this level.

4HR Chart

The current hidden bullish divergence pattern formed in combination with an exit of the oversold area on the above 4hour time frame shows a highly probable resumption of the bullish trend. However, the collapse of the bullish inclination line will be a big upset into a bearish trend.

Conclusion

The USDMXN trades within a symmetrical triangle on the monthly time frame with the price forming lower highs on June ’18, December ’18, and August ’19. A breakout to the upside is more likely; however, we should look out for surprises on the downside moving forward, especially on the daily and 4hour time frames.

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