MXNUSD breaks below key technical support level
Mexican Peso/US Dollar (MXNUSD) Technical Analysis Report for Mar 27, 2020 | by Techniquant Editorial Team
MXNUSD finished the week 4.54% higher at 0.04282 after losing 76 pips (-1.74%) today on low volume. Closing within the previous day's range, prices failed to decisively move beyond the prior day's trading range in a lackluster session.
Daily Candlestick Chart (MXNUSD as at Mar 27, 2020):
Friday's trading range has been 140 pips (3.21%), that's below the last trading month's daily average range of 194 pips. Weekly volatility is also lower, being slightly below the market's average weekly trading range. The longer-term, monthly volatility is currently strongly higher than usual for MXNUSD.
After moving higher in the previous session, the market closed lower but above the prior day's open today, forming a bearish Harami Candle. Additionally, one bearish candlestick pattern matches today's price action, the Black Candle.
Prices broke below the key technical support level at 0.04351 (now R1), which is likely to act as resistance going forward. After having been unable to move above 0.04359 in the previous session, the currency ran into sellers again around the same price level today, failing to move higher than 0.04374. The last time this happened on March 20th, MXNUSD lost -3.71% on the following trading day.
The trend is clearly bearish, showing an intact downtrend in the short, medium and long-term.
Among the four market conditions that our pattern recognition engine identified today, the statistics for the Support/Resistance based market condition "Price broke through Technical Support S1" stand out. Though it is usually interpreted as bearish, it has actually shown to be bullish for MXN/USD. Out of 366 times, MXNUSD closed higher 56.56% of the time on the next trading day after the market condition occurred. The optimal exit for swing trading this condition on the long side has been after two trading days, showing a win rate of 50.82% with an average market move of 0.02%.