Technical Analysis – USDMXN rockets to 4-month peak; bias switches to bullish
Posted on May 31, 2019 at 8:39 am GMT
Melina Deltas, XM Investment Research Desk
USDMXN skyrocketed to a fresh four-month high of 19.7071, penetrating the consolidation area of 18.7440 – 19.7071 to the upside and switching the short-term picture from neutral to positive.
The technical indicators are feeding prospects for a positive short-term trading; the RSI is entering overbought territory, while the stochastic trends around the 80 level. Also, in Ichimoku indicators, the red Tenkan-sen keeps rising above the blue Kijun-sen.
If the 50.0% Fibonacci retracement level of the downleg from 20.6540 to 18.7440 around 19.6973 proves easy to overcome, the spotlight would turn to the 61.8% Fibonacci of 19.9219 and the 19.9820 inside swing bottom, reached on December 12, confirming the positive structure.
A failure to overcome today’s high could send prices down to the 38.2% Fibonacci of 19.4750, which acted as strong resistance in the past. Even lower, support could be next found at the 200-day simple moving average (SMA) currently at 19.3352. More declines could drive the market straight to the 23.6% Fibonacci of 19.1928.
In the medium-term picture, USDMXN turned slightly bullish after violating its range-bound action to the upside. Should the market continue the upward pattern, the outlook may turn brighter.