A consolidated range has emerged in the USD/MXN the past week. Yes, trading has been choppy and tests of support and resistance levels have played out. However, this is exactly the type of price action certain speculators love when they are looking at technical charts to gauge the next forex trend. The USD/MXN has seen a range of 22.0000 to 22.89000 since August has begun.
The current value juncture of the USD/MXN is within the middle of its August range and may be considered to be leaning towards a slightly bullish trend within a one-month technical view. However, that perception is largely based on the limited bullish trend which has emerged since the last week of July. The USD/MXN hit the 21.84000 level on the 29th of July. Risk appetite as always is a key ingredient of the trading landscape for the Mexican Peso and its test of support late July did spark some buying momentum.
Global equity indices have remained optimistic and Mexican corporate share values have put in gains the past month too on its indices. The Mexican economy has many challenges ahead, but the USD/MXN forex pair remains engaged per its trading volumes and its range the past two months technically remains rather consolidated which suggests stability.
Resistance at the 22.60000 should be watched carefully, this juncture could prove an inflection point for trading. If the higher juncture is tested, it could produce a limited reversal downwards. If the resistance level is broken upwards an important test lurks at the 22.85000 juncture which has proven strong since early July. A move above this resistance level would indicate a change in risk appetite may be underway which should be given attention.
However, if resistance proves capable and holds its ground, speculators may be able to initiate limit orders which seek to sell the USD/MXN between the 22.60000 and 22.70000 levels and look for downward momentum to emerge. Trading in the USD/MXN has been tranquil the past couple of weeks, but its range has certainly proven a solid ground for speculators to take advantage of short term trends that have tested support and resistance levels without too much volatility. Global markets have produced optimistic gains for equity indices and traders may continue to lean towards the belief the USD/MXN will test support levels near term.
Mexican Peso Short Term Outlook:
Current Resistance: 22.60000
Current Support: 22.35000
High Target: 22.85000
Low Target: 22.30000
