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Bearish Trend Resumption Potential Trading Signal

As many other major currencies have struggled recently against the USD, the Mexican Peso has actually started to resume its long-term bearish trend.



Since touching a high of 18.00000 last Tuesday, the USD/MXN has broken away from many other major currency pairs and actually been able to trigger its long-term bearish trend again. As of this morning’s trading, the USD/MXN is near the 17.60000 ratio and is challenging prices not seen since the 17th of May.  Before this date, it should be noted the USD/MXN actually touched a low of around 17.40675 on the 15th of this month.

The long-term lower trend of the USD/MXN has been demonstrated significantly via technical charts, and the Mexican Peso has been able to establish again it is not correlating to many major currency pairs.  Yes, the past few weeks have seen many major currencies struggle against the USD, and the Mexican Peso was no different when it hit a high of 18.00000 on last Tuesday. However, while most other currency pairs have remained in the upper realms of their near-term charts, the USD/MXN has resumed a downward climb.

The ability of the USD/MXN to make support levels vulnerable over the past four days is noteworthy. Traders must remember that volumes in Forex today will be extremely light because many European nations and the U.S. are on holiday. Speculators should be prepared for the potential of volatility and swift price movement. But there is also an important chance the USD/MXN may see some intriguing trend movement today.

The U.S. debt ceiling agreement may cause some risk-averse trading, which has been seen in the past couple of weeks to subside. The vote still has to take place in Washington this Wednesday, but the belief is the compromise will be passed. If this happens and financial institutions are less worried about a debt crisis it could cause a bit of selling in the USD.

  • While fear of a debt crisis in the U.S. may vanish, concerns remain about the U.S. Federal Reserve remaining hawkish.
  • U.S. economic data continues to produce stubborn inflation statistics, which may cause the U.S. central bank to consider more increases to the Federal Funds Rate.
  • The long-term bearish trend of the USD/MXN is not a one-way avenue for day traders, who must use risk management to protect their positions against natural reversals in Forex.

Traders should remember today’s volumes will be lighter than normal and the USD/MXN could be affected by a lack of transactions making it prone to volatility.  Traders who want to pursue lower values in the USD/MXN short-term should remain cautious and not become overly ambitious if they decide to pursue the potential of more downside movement developing.

Current Resistance: 17.60970

Current Support: 17.57100

High Target: 17.66150

Low Target: 17.54050


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