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Market Analysis

Technical analysis of USDMXN

June 27, 2019
BY Michael Stark

The four-hour chart of dollar-peso (USDMXN) shows us a fairly long period of sideways movement over the past few weeks. The breakout downward late last week in the aftermath of the Fed’s meeting was not a sustained direction. We can identify the area of 19.87 as the most important high resistance on this timeframe. Meanwhile low support seems to be around 18.90.

Technical indicators on USDMXN H4

The usual combination of moving averages for H4 USDMXN is somewhat mixed. However, the longer-term MAs suggest a sell signal. Price is currently below all of the 20 (from Bands), 50, 100, and 200-period simple moving averages. However, we can see a golden cross on Tuesday of the 20 and 50 SMAs. The 50 SMA death crossed both the 100 and 200 SMAs last week. It appears that the 100 SMA will also death cross the longer 200 line in the immediate future unless price suddenly spikes. 

Some of the more important near-term resistances then could come from MAs. The strongest of these would probably be the area of the 100 and 200 SMAs around 19.22. However, the 50 SMA could also be an area of support around 19.11, which price is currently testing.

Bollinger Bands (20, 0, 2) indicate that volatility is decreasing overall. The deviations have shrunk over the past couple of days. We might also point to a weak sell signal from the current location of price close to the lower Band. Neither Bands nor the slow stochastic (15, 5, 5) suggest oversold conditions at the time of writing. While the stochastic line itself has moved into the zone of selling saturation, the signal line of the stochastic remains fairly far above this area at around 30. MACD also suggests a weak sell signal, with the histogram close to zero and slightly below the signal line.

Price action and Fibonacci

Price action also suggests overall a weak sell signal for USDMXN. Yesterday morning’s large down candle came after a series of dojis and near-dojis on Tuesday. However, momentum seems to be quite weak in both directions, and this morning’s doji suggests a degree of ongoing indecision.

Fibonacci lines here are based on the large downward movement in the first half of June. Last week’s attempt to extend stopped fairly quickly after moving below the key psychological area of 19.00. It also appears that the 23.6% retracement area could be an important resistance. Price as moved between this and the area of 0% fairly consistently since the week of June 10.

Technical analysis USDMXN: summary

Technical indicators on the four-hour chart of USDMXN overall suggest a weak sell signal. While price might continue to move slightly downward into the end of the week, any move significantly beyond recent lows is unfavorable. Equally, traders should be aware of the important news from Banxico this evening that could affect this symbol, particularly quarterly American GDP growth at 12.30 GMT.

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