The US dollar fell a bit during the trading session on Monday as traders came back to work. It does make sense, considering that we had rallied significantly over the last several sessions that we would see a bit of selling at the psychologically important 19.50 pesos level. Looking at this chart, you can see that I have a blue rectangle just above at the 19.65 level that has been very important. This is an area that has been crucial in the past as we had seen a lot of selling, but it should now offer resistance. However, that’s not the end of the story.
Looking at the black 200 day EMA, you can see that we have seen a bit of support, and we also have the 50 day EMA which is in red just below curving to the upside. That being the case, it’s very likely that we will find buyers sooner rather than later. This will be especially exacerbated if the oil markets can roll over a bit, because it will obviously work against the Mexican peso in general. I do see a massive support underneath, so I think we only drop so much.
If we did break down below the 19.25 pesos level, then we will almost certainly go down towards the uptrend line underneath. That is a major uptrend line that had held quite nicely, and we have rallied significantly since then. It is because of this that I believe the pair does try to climb higher, but obviously we have a lot of choppiness ahead of us. If we can break above the 19.65 handle, then I think it opens the door to the 19.90 pesos level, possibly even the 20 pesos level after that which of course is psychologically important.
