The USD/MXN has seen resistance levels incrementally lower the past couple of weeks as the forex pair proceeds to demonstrate a fight over equilibrium. Bearish sentiment remains technically abundant, but there is little doubt that reversals higher have proven distasteful for speculators. However the past week of trading has seen the emergence of rather polite reversals higher which seem to be within an acceptable range and can be considered rather natural trading cycles.
The USD/MXN remains above the 20.00000 level by a healthy margin, but it is now beginning to approach the important barometer and some traders may be using it as a rather greedy support level they are aiming. Before the 20.00000 is hit, first the 20.10000 to 20.05000 junctures must prove vulnerable and this has not happened since the middle of February.
This technical consideration is important, because the middle of February is not only a solid indication of when bullish sentiment began to be generated within the USD/MXN, but it is also when it can be said that institutional financial houses began to alter their trading perspectives likely in consideration of US stimulus and its effect on the US bonds market. The USD/MXN has been able to push itself lower since reaching highs of nearly 21.60000 on the 8th of March as it displays a fight for equilibrium.
On the 18th and 19th of March the USD/MXN was able to touch the 20.25000 vicinity before it bounced higher and traded within sight of the 21.00000 mark on the 24th of the month. Since reaching around 20.97000 on the 24th of March, the USD/MXN has put in an incremental bearish move and begun to stir long term technical sentiment. The fact that the forex pair is trading below the 20.20000 juncture is important and if this can be sustained it may be a signal the USD/MXN may be ready to move lower.
Cautious traders may want to wait for slight moves higher in the USD/MXN before they put a selling position to work. Support near the 20.130000 to 20.11000 junctures should be watched for now and possibly used as take profit targets for traders who want quick results. The USD/MXN could certainly provide a reversal upwards which will test higher resistance, but the past week of trading may be preparing the groundwork for another incremental move lower short term.
Mexican Peso Short Term Outlook:
Current Resistance: 20.22000
Current Support: 20.11000
High Target: 20.32000
Low Target: 19.98000
