USD/MXN Price Analysis: Bears turn cautious amid oversold RSI, not ready to give up yet

USD/MXN continues with its struggle to gain any traction and languishes near a multi-year low.
The formation of a descending channel points to a well-established short-term bearish trend.
The RSI on the daily chart is still flashing oversold conditions and holding back bearish traders.

Haresh Menghani FXStreet

The USD/MXN pair struggles to capitalize on the previous day's modest rebound from the 17.0245 area, or its lowest level since December 2015 and oscillates in a narrow range through the early part of the European session on Tuesday. The pair currently trades just below the 17.1000 round figure, nearly unchanged for the day, and seems vulnerable to sliding further.

From a technical perspective, the recent downfall from the vicinity of the 18.00 round-figure mark, or the May swing high, has been along a downward-sloping channel. This points to a well-established short-term bearish trend and suggests that the path of least resistance for the USD/MXN pair is to the downside. That said, the Relative Strength Index (RSI) on the daily chart is still flashing oversold conditions and holding back traders from placing fresh bearish bets around the pair.

Nevertheless, the lack of any meaningful buying suggests that the downtrend is still far from being over. Hence, any recovery attempt could attract fresh sellers near the 17.20-17.25 area, which coincides with the 50-period Simple Moving Average (SMA) on the 4-hour chart. This is closely followed by the top end of the aforementioned channel and should act as a pivotal point. A convincing breakout will suggest that the USD/MXN pair has formed a bottom and pave the way for additional gains.

On the flip side, the multi-year low, around the 17.0245-17.0240 zone could protect the immediate downside ahead of the trend-channel support, currently pegged just below the 17.0000 psychological mark. Some follow-through selling will be seen as a fresh trigger for bearish traders and make the USD/MXN pair vulnerable to accelerate the fall towards the 16.60-16.55 region en route to the November 2015 swing low, around the 16.35 region.

USD/MXN 4-hour chart

Key levels to watch

USD/MXN

Overview
Today last price	17.0883
Today Daily Change	0.0079
Today Daily Change %	0.05
Today daily open	17.0804

Trends
Daily SMA20	17.4535
Daily SMA50	17.7094
Daily SMA100	18.0832
Daily SMA200	18.8332

Levels
Previous Daily High	17.1724
Previous Daily Low	17.061
Previous Weekly High	17.3353
Previous Weekly Low	17.0243
Previous Monthly High	18.078
Previous Monthly Low	17.4203
Daily Fibonacci 38.2%	17.1299
Daily Fibonacci 61.8%	17.1036
Daily Pivot Point S1	17.0368
Daily Pivot Point S2	16.9932
Daily Pivot Point S3	16.9255
Daily Pivot Point R1	17.1482
Daily Pivot Point R2	17.216
Daily Pivot Point R3	17.2596

Author

Haresh Menghani

FXStreet

Haresh Menghani is a detail-oriented professional with 10+ years of extensive experience in analysing the global financial markets.

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