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Home Technical Analysis

USD at Risk of Breaking Support vs Peso

Forex Tips by Forex Tips
October 23, 2020
in Technical Analysis
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USD/MXN Highlights:

  • USD/MXN weakness continues with USD selling, risk appetite steady
  • Crossroad of support just below, but not confident it will hold

USD/MXN risks breaking support soon

USD/MXN has been slowly withering since an early-month plunge. This has support in focus via a few different angles, none of which are extremely important but together could amount to some type of floor. Or not.

Support comes in by way of the 2018 high, which is right around where the September bounce began and created a low at 20.84. This is in confluence with a downward slope from the April high, a line that has had meaning on several occasions in the past three months as mostly resistance, but also support as recently as October 9.

There is also a trend-line running underneath the June and September low that is the parallel to the trend-line running over peaks created in June, August, and September.

The intersection of these various angled lines of support does make for a spot of interest, but given that two of them are running in the direction of the downtrend, it does take some of the importance away.

Nevertheless, support is support until it’s not. The area from 20.84 to ~20.55 is considered a meaningful zone to watch for a bounce to develop. Right now, what undermines the case for a rally is the stabilization in risk appetite (stocks) and general dollar weakness.

If, however, we see a sharp(ish) reversal off support, then a recovery bounce could at least be in order. How high is tough to say at this juncture with the general trend/tone working against USD/MXN. A break of support is likely to lead to a minor level from 2018 at 20.25 first, then potentially lower.

USD Forecast

USD Forecast

Recommended by Paul Robinson

Check out the Q4 USD Forecast

USD/MXN Daily Chart (crossroad of support)

usd/mxn daily chart

USD/MXN Chart by TradingView

Resources for Forex Traders

Whether you are a new or experienced trader, we have several resources available to help you; indicator for tracking trader sentiment, quarterly trading forecasts, analytical and educational webinars held daily, trading guides to help you improve trading performance, and one specifically for those who are new to forex.

—Written by Paul Robinson, Market Analyst

You can follow Paul on Twitter at @PaulRobinsonFX





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