USD/MXN Price Analysis: Divergence between price action and RSI warrants further upside

The USD/MXN bounces after hitting multi-year lows around 18.3301, snapping three days of consecutive losses. Nevertheless, the USD/MXN would remain pressured after a strong downtrend dragged prices from the last year's $21.05 peak toward the above-mentioned $18.33 area. At the time of writing, the USD/MXN exchanges hand at 18.4076, above its opening price by 0.25%.

Technically speaking, the USD/MXN daily chart portrays a bearish continuation as the most likely scenario. However, the divergence between the USD/MXN price action and the Relative Strength Index (RSI) remains intact, which would spur a reversal that might open the door for the USD/MXN buyers to reclaim the $19.00 psychological level. This means as price action registered lower lows, the RSI has not. Therefore, risks for a reversal remain, which would open the door for further USD/MXN upside.

For that scenario to play out, the USD/MXN needs to crack the confluence of a downslope-resistance trendline and the 20-day Exponential Moving Average (EMA) at 18.6951, followed by the February 15 daily high at 18.7479, followed by the 50-day EMA At 18.9669, ahead of the 19.0000 psychological price level.

The USD/MXN must conquer the 18.4000 mark for a bearish continuation. Once cleared, that will expose the YTD low at 18.3301, followed by the psychological $18.00.

USD/MXN Daily chart

USD/MXN Key technical levels