The USD/MXN is again near the important stomping ground of 19.90000 as it shows signs of bearish sentiment. Traders who have not looked at the Forex pair the past week may believe nothing of significance has taken place, but before going into last weekend the USD/MXN provided a spike higher and yesterday produced a reversal back to last Friday’s support levels. The 20.00000 juncture was punctured higher during the past four days of trading and an apex of nearly 20.17000 was seen only two days ago.
The 19.90000 level has proven a magnet for price action the past month, serving as both support and resistance. The 19.80000 juncture below has been a harsh testing ground for support since late April and moves below this ratio have not showed sustainable price action. Speculators may be asking if this time is different, and if a prolonged bearish streak downwards is going to push aside what has proven to be more than adequate support levels?
Incrementally, the past week, the USD/MXN has actually tested bullish territory just as much as bearish values. This choppy price territory continues to keep the door open for traders who enjoy the potential of simply pursuing reversals based on support and resistance levels. Speculators who favor these types of conditions must use conservative amounts of leverage, be patient and use stop loss and take profit parameters that allow the trades to work. Short-term traders simply trying to time the USD/MXN may find that speculating on fast trades can be painful if transaction costs are a concern particularly if they need to carry a position overnight.
If the USD/MXN can now maintain its value below the 19.95000 juncture and not veer too much higher, this may be seen as a signal further price pressure will build that produces more selling. However, the biggest question is where support will surface. The 19.89000 to 18.81000 junctures have proven quite capable of causing reversals higher since early July.
Speculators who want to buy the USD/MXN if it moves slightly lower and tests support cannot be blamed for being buyers, but they should not be overly greedy while looking for higher values. Traders should probably anticipate more choppy conditions within the USD/MXN. Although the price range of the USD/MXN has certainly grown the past week with a test of highs, traders may suspect downside action may become the dominant feature short term and that support will prove an important testing ground.
Mexican Peso Short-Term Outlook:
Current Resistance: 19.98000
Current Support: 19.88000
High Target: 20.14000
Low Target: 19.80100
