USD/MXN Price Analysis: Hangs near multi-year low, bears retain control below 17.0000 mark

USD/MXN consolidates in a range below the 17.0000 mark through the Asian session on Thursday.
The formation of the descending channel and the recent price action still favours bearish traders.
The RSI on the daily chart is on the verge of breaking into the oversold zone and warrants caution.

Haresh Menghani FXStreet

The USD/MXN pair struggles to capitalize on the previous day's modest bounce from the 16.8085 region, or its lowest level since December 2015 and oscillates in a narrow trading band through the Asian session on Thursday. Spot prices, meanwhile, now seem to have found acceptance below the 17.0000 mark and remain vulnerable to depreciate further.

The decline witnessed over the past three months or so has been along a downward-sloping channel, which points to a well-established short-term bearish trend. Furthermore, the recent failure near the trend-channel resistance, which coincides with the 50-day Simple Moving Average (SMA), and the subsequent slide validates the negative outlook for the USD/MXN pair. That said, the Relative Strength Index (RSI) on the daily chart has moved on the verge of breaking into the oversold zone and warrants some caution.

Hence, any further decline below the overnight swing low is more likely to find support near the lower end of the aforementioned channel, currently pegged around the 16.6750 area. A convincing breakdown below, however, will be seen as a fresh trigger for bearish traders and set the stage for an extension of a one-year-old downtrend.

On the flip side, any meaningful recovery now seems to confront stiff resistance near the 17.0000 horizontal support breakpoint. This is followed by the 17.0500 hurdle, which if cleared decisively might trigger a short-covering rally and lift the USD/MXN pair towards the 17.1200 intermediate barrier. The momentum could get extended further towards the next relevant resistance near the 17.1790-17.1800 region en route to the 17.2420-17.2430 supply zone.

USD/MXN daily chart

Key levels to watch

USD/MXN

Overview
Today last price	16.8848
Today Daily Change	-0.0172
Today Daily Change %	-0.10
Today daily open	16.902

Trends
Daily SMA20	17.1012
Daily SMA50	17.3945
Daily SMA100	17.8178
Daily SMA200	18.5794

Levels
Previous Daily High	17.0645
Previous Daily Low	16.8085
Previous Weekly High	17.3957
Previous Weekly Low	16.9803
Previous Monthly High	17.7286
Previous Monthly Low	17.0243
Daily Fibonacci 38.2%	16.9063
Daily Fibonacci 61.8%	16.9667
Daily Pivot Point S1	16.7855
Daily Pivot Point S2	16.669
Daily Pivot Point S3	16.5295
Daily Pivot Point R1	17.0415
Daily Pivot Point R2	17.181
Daily Pivot Point R3	17.2975

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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