USD/MXN Price Analysis: Bulls seeking a discount for higher-highs

  • USD/MXN has spiked to resistance and is now expected to offer a discount to the bulls. 
  • Medium-term resistance is now in focus as the price confirms its intent for higher-recovery-highs in a phase of accumulation. 

The peso has fallen further in the recent trade with a resurgence in the US dollar. 

The following is a top-down analysis to gauge where the next opportunity may come depending on the market structure and price action.

Monthly chart

The peso had enjoyed a bullish trend since supply in the first quarter of 2020. 

However, in recent months, it has given back ground to the US dollar as the greenback attempts to correct.

While there is still room for lower in a phase of accumilation, at least a 38.2% Fibonacci retracement would be expected prior to further downside.

This gives rise to an upside bias on the lower time frames, for now. 

Weekly chart

The weekly chart shows that the price has made a lower low in a correction of the late Jan weekly bullish impulse.

The correction is now expected to result in a new bullish weekly impulse and a higher high. 

A -272% Fibonacci retracement of the correction's range comes in the confluence of the monthly 38.2% Fibo target and the prior support/resistance area. This further cements the bullish bias. 

Daily chart

Tuesday's price action has resulted in a strong bullish candle that has broken old resistance which would now be expected to act as support. 

Bulls will be monitoring for a bullish close above this support on a daily basis to confirm the upside bias. 

4-hour chart

As can be seen, the conditions have flipped bullish on the technical indicators on the 4-hour chart with an 8/21 EMA bullish cross-over and MACD now above zero.

Meanwhile, a Fibonacci retracement from resistance to at least a 38.2% support confluence, or even as deep as the 61.8% confluence, is not out of the question at this juncture.

This would be more than expected following such a spike to resistance and would offer the bulls a discount to reengage in anticipation of higher highs to follow. 

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