As of this morning the USD/MXN has again lurched towards important support levels. This move lower however has developed after the USD/MXN was able to produce a push higher which punctured the 20.00000 mark only a few days before. The USD/MXN is now traversing near the 19.86000 level and once again speculators should watch the 19.90000 to 19.95000 junctures as potentially solid resistance areas to launch speculative selling positions.
The USD/MXN certainly remains within a bearish trading range and its ability to move higher late last week can be looked at as a natural reaction to vital support levels being tested. It is also possible that imbalances within forex regarding the USD/MXN may have occurred due to the long US holiday weekend.
Yesterday’s trading intriguingly while staying within the confines of its higher recent latitudes did not seriously test the 20.00000. In fact the USD/MXN only traversed above the 20.00000 juncture on the 27th and 28th of May. This opens the door to the possibility that this morning’s trajectory lower, is again establishing the bearish momentum within the USD/MXN and that choppy reversals higher may not be as vicious short term.
Support levels are tempting as targets for speculators because they are so close. Traders need to be careful when entering their trades if they continue to look for potential selling opportunities. The 18.82000 level has caused reversals higher and has proven to be difficult to penetrate lower. The 17th of May saw a test of the 19.70000 juncture before the USD/MXN began to trade lower.
However speculators may continue to believe additional momentum can be found within the long term bearish trend the USD/MXN has established. Traders need to make sure they do not become overly greedy and cash out profitable positions with quick hitting take profit orders, particularly if they are using a large amount of leverage. The USD/MXN continues to look like it is showing potential to trade lower, but conservative traders should remain cautious and short the forex pair when slight reversals higher occur which come within sight of technical resistance.
Mexican Peso Short Term Outlook:
Current Resistance: 19.95000
Current Support: 19.83000
High Target: 20.06000
Low Target: 19.74000
