The US dollar initially tried to rally against the Mexican peso to continue the massive move to the upside that had been had on Thursday during the Friday session. However, we did get a less than stellar jobs report out of the United States, and therefore we did not have enough momentum to continue going higher.
I now have the cluster in question that we had been talking about yesterday marked by a blue rectangle. It sits around the 19.65 pesos level, and for me is a very obvious barrier that will be difficult to get above. If we can, then obviously the market has further to go. The fact that we pull back from this level after this type of poor economic showing during the day is not a huge surprise. In fact, I suspect that many people started selling immediately, but I still see hope for the upside, at least in the short term.
Looking at the chart the bottom of the candle stick for the Thursday session features the 200 day EMA. Beyond that, the pullback wasn’t drastic, nor was it sudden. We are still hovering around the 19.50 pesos level, so that in and of itself is something to pay attention to. The 50 day EMA is starting to curl higher, which means we could get the so-called “golden cross” soon as well. We have still made a “higher high” and are just now testing what was once the resistance with this pullback.
I suspect that we may get a little bit of softness from here, but then in another couple of days we should start to see buyers come in and try to pick this market up. As the uptrend line held, it shows that the uptrend is still somewhat intact. However, if we break down below 19.25 pesos, then it muddies the picture.
