After testing critical support levels late last week the USD/MXN has seen a sudden bullish spike higher emerge.
Early trading this morning in the USD/MXN has seen bullish momentum add onto Friday’s late trend, which developed after critical support at 20.80000 into focus. The USD/MXN has now busted through short term resistance and the 21.50000 juncture is in view. The last time the Mexican Peso traded near the 21.50000 mark was on the 10th of September.
The USD/MXN has seen a strong bearish trend emerge mid-term and its recent progression of downward movement has been intense since early August. The sudden higher short term surge which began on late Friday serves as a reminder forex pairs do not move in one direction and reversals are a common part of the trading landscape which must be handled by speculators by using risk management wisely.
The strong bearish sentiment which has dominated the USD/MXN the past month saw the Mexican Peso touching values it has not traversed since March of this year. When the 20.80000 level was approached on Friday it obviously triggered buying positions within forex. The sudden spike upwards now puts speculators within an uncomfortable position, and they must decide if the short term will continue to create more bullish behavior and test of resistance above or if the bearish trend will reemerge.
Global risk appetite appears cautious as traders anticipate the US markets opening. Equity indices worldwide have mostly been negative and the future markets in the US indicate declines will be prevalent as trading starts. However, traders should also understand that equity markets have a tendency to turn around quickly. Risk appetite has proven its capability for producing gains. Meaning that one bad day of trading doesn’t mean negative sentiment will remain in the marketplace long term.
Speculators should anticipate choppy conditions within the USD/MXN today and use limit orders accordingly if they are going to participate. The 21.40000 level is important and if resistance holds near the 21.53000 mark another downward bearish movement can develop.
Short term speculators should be ready for a rather convoluted test of values. Traders may want to take advantage of what could prove to be a rather up and down trading session of the USD/MXN by using quick limit orders and looking for limited movements as they keep in mind a bearish trend of the forex pair can reignite again.
Mexican Peso Short Term Outlook:
Current Resistance: 21.53000
Current Support: 21.20000
High Target: 21.66000
Low Target: 20.85000