MXNUSD runs into sellers again around 0.04404
Mexican Peso/US Dollar (MXNUSD) Technical Analysis Report for May 22, 2020 | by Techniquant Editorial Team
Moving higher for the 5th day in a row, MXNUSD finished the week 5.42% higher at 0.04399 after edging higher 25 pips (0.57%) today. Today's close at 0.04399 marks the highest recorded closing price since March 13th. Trading up to 59 pips lower after the open, the currency managed to reverse during the session as bulls took control ending the day above its opening price. Closing above Thursday's high at 0.04394, the market confirmed its breakout through the previous session high after trading up to 10 pips above it intraday.
Daily Candlestick Chart (MXNUSD as at May 22, 2020):
Friday's trading range has been 88 pips (2.01%), that's slightly below the last trading month's daily average range of 95 pips. Things look different on the weekly timeframe, where the market's trading range of the last week has been slightly above the market's average weekly trading range. The longer-term, monthly volatility is currently slightly higher than usual for MXNUSD.
After having been unable to move above 0.04394 in the prior session, the forex pair ran into sellers again around the same price level today, missing to move higher than 0.04404. The last time this happened on Tuesday, MXNUSD actually gained 2.08% on the following trading day.
With another close above the upper Bollinger Band, prices are confirming their strong upward momentum in the short-term. A drop back into the Bollinger Band on the next trading day though could signal a potential change in momentum that might lead to a correction back down towards the center of the Bollinger Bands at 0.04182.
While the FX pair is experiencing a short-term uptrend, this could just be a correction, as both the medium and long-term trends are still bearish.
Among the seven market conditions that our pattern recognition engine identified today, the statistics for the Price Action based market condition "Closed above last periods high" stand out. Although it is usually interpreted as bullish, it has actually shown to be bearish for MXN/USD. Out of 615 times, MXNUSD closed lower 53.66% of the time on the next trading day after the market condition occurred. The optimal exit for swing trading this condition on the short side has been after 10 trading days, showing a win rate of 54.47% with an average market move of -0.23%.