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by Charalambos Pissouros

USD/MXN Approaches Key Resistance Zone

USD/MXN tumbled on Wednesday, falling below 19.090, the lower end of the sideways range that was containing most of the price action since June 11th. However, the rate found support near the 18.900 zone, from which it rebounded strongly. Although the rate is getting back near the 19.090 zone, we would see a decent chance for the bears to jump back into the action and push the rate down again.

If the bears are strong enough to take charge from near the lower boundary of the aforementioned range, which is at 19.090, we would expect them to pull the trigger and aim for another test near 18.900. If, this time, they manage to overcome that obstacle, then, we could see them driving the battle towards the 18.800, zone, fractionally above the low of May 1st.

Looking at our short-term oscillators, we see that the RSI rebounded from near 30, and is now very close to its 50 line, while the MACD, although negative, lies above its trigger line. These indicators suggest that the rate could continue trading slightly higher, and perhaps re-enter the short-term range. However, the 50 level of the RSI has been acting as a decent resistance lately, which adds to our view that the bears could gain back control from near the lower end of the range.

In order to start assessing whether the near-term outlook has turned bullish, we would like to see a break above 19.220. This would confirm a forthcoming higher high on the 4-hour chart and could allow advances towards the high of June 10th, at around 19.330. If the bulls are strong enough to overcome that hurdle as well, then we may see them pushing towards the 19.465 area, defined by the low of June 5th.

USD/MXN 4-hour chart technical analysis

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