USDMXN Outlook & Technical Analysis for crypto platforms
It is a rewarding experience, trading the USDMXN on Nadex.com platform given the highly volatile nature of the pair compared to pairs like the EURUSD and the AUDUSD.
This week like others, we’ll be analyzing the essential technical and fundamental drivers of the USDMXN.
USD/MXN hits 19.50, As the U.S. and China announce resumption in trade negotiations
The Mexican Peso has made some strides since late August, according to Luis Hurtado, an analyst at CIBC. Hurtado has pointed out that this resulted as China and the U.S. announced a resumption of trade negotiations later in October with a friendly tone resurfacing not long ago.
According to Hurtado, though the news of the resumption of trade negotiations has ignited a global risk-on sentiment that favors tactical short USDMXN positions, a high level of caution must be maintained against this stance. He added that internal and external risks including such factors as lower GDP growth prospects, the pending USMCA ratification, the optimistic 2020 Budget assumptions, Brexit, the start of the U.S. presidential race, and the uncertain US-China trade faceoff, all join to make the MXN a risky bet for the rest of the year
According to analysts, a year-end forecast of 19.9 is set, and two additional 25bps rate cuts for the remainder of 2019 is expected. They also expect USD/MXN to trade at 20.4 in Q2 of 2020.
U.S. C.B. Consumer Confidence
Conference Board (C.B.) Consumer Confidence which is a leading economic index, evaluates the level of confidence consumers have in the economy. The indicator can predict consumer spending a significant player in overall economic activity.
A higher value signifies a higher consumer optimism.
A greater than expected value should be considered a positive outlook for the currency, while a lower than expected value hints at a bearish outlook for the USD.
Data released on August 27 shows the actual reading to be 135.1 while the previous reading value was135.8. The forecast value read 129.5, hinting at a negative outlook for the USD.
USDMXN Technical Analysis
USDMXN Long term Projection: Bullish Swings
USDMXN Monthly Chart
Still trading above the 19.36438 resistance, turned support level after the August 01 breach, the USDMXN may resume its journey upward if the support level can stand the test of time. Otherwise, a close below the level may drive the price towards the 18.74686 support.
USDMXN Weekly Chart
The shooting star reversal candlestick pattern hinted a bull trap price pattern that was later confirmed on September 02, as shown above. Although last week closed bullish, and the dollar to pesos exchange rate still trades above significant support (19.36438), there is no visible price setup to resume the bullish trend. Perhaps, if the current week closes within the high/low range of last week, we may start to see signs of a rally.
USDMXN Medium Term Projections: Bullish
Daily Time Frame
Slowly grinding on critical resistance levels, the bulls push above 19.45918 and advance towards the hidden bearish resistance 19.50570. If this happens, we should see a dominance of the Greenback over the Mexican Peso.
From the 4hour time horizon, the USDMXN price trades within alternating bearish and bullish divergence patterns from September 10 ’19 09:00 to September 24 05:00. The resistance level set up by the hidden bearish divergence at press time appears to be the only obstacle in the path of the bulls. A breach of the 19.50570 resistance will bolster the bullish drive.
USDMXN Short Term Projections: Bullish
USDMXN 1HR Intraday Chart
A view from the intraday chart reveals a steadily growing bullish trend beginning from a regular bullish divergence on September 19. Rejection of support levels on September 20 00:00 and 20:00 has not been able to hold back the bulls. However, a collapse of the hidden bullish divergence trend may be the signal required for a short sell order.
From a general perspective, the USDMXN appears to be completing the price correction, as seen by the higher lows on the lower time frames. However, while we time long entry positions, we should also be prepared for any surprise in form of a price plunge.