MXN strength persists, USD/MXN eyes fresh multi-month lows based on clear Elliott Wave pattern
|The bearish tone in USD/MXN remains intact, with traders watching key levels for confirmation of the next leg lower. We are consistently updating daily this forex pair, and let’s see what we said about it almsot a mont back, on Nov 05.
“USDMXN is making a bigger recovery, but it still looks corrective as an abc correction within higher degree wave four, as we see it coming higher out of wave b triangle pattern into wave c. So still watch out for another sell off for wave five, especially if it drops back below the channel support line near 18.36 which is a bearish confirmation level.”
Just a week later or so, we have seen an impulsive sell-off and new needed update for members
“USDMXN is still good, it could be just trading in a bigger intraday ABC corrective recovery with the resistance here at 18.50 – 18.60 area, so still watch out for a bearish resumption toward September lows”
It did not take much for the pair to turn around from our projected resistance zone, which gives us a hint that our proposed count is aligned with market expectations!
As you can see from the charts above that were taken for the members area, the patterns so far played out very nicely, although not all patterns will always play out so perfectly. What is really important is that we always should pay attention to strong Elliott wave patterns. And what are strong Elliott wave patterns? These are the patterns with the clearest possible wave structure. In our case, what caught our attention for this whole analysis was the previous wave B triangle in the middle of a correction, since we know that moves out of a triangle will be final in a sequence. That was the main reason why we expected a reversal down in the first place. The next important signal was the reversal in price itself, which occurred very impulsively, and that is the direction in which you want to take action, especially when you consider that you had an A-B-C rise against the previous very strong downtrend. You certainly want to take action in the direction of the primary trend.
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