USDMXN breaks below Thursday's low
US Dollar/Mexican Peso (USDMXN) Technical Analysis Report for May 22, 2020 | by Techniquant Editorial Team
Moving lower for the 5th day in a row, USDMXN finished the week -5.13% lower at 22.732 after edging lower 132 pips (-0.58%) today. Today's close at 22.732 marks the lowest recorded closing price since March 13th. Trading 310 pips higher after the open, the market was unable to hold its gains as the bears took control ending the day below its opening price. Closing below Thursday's low at 22.756, the FX pair confirmed its breakout through the prior session low after trading up to 49 pips below it intraday.
Daily Candlestick Chart (USDMXN as at May 22, 2020):
Friday's trading range has been 461 pips (2.02%), that's below the last trading month's daily average range of 547 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 USDMXN.
Unable to break through the key technical resistance level at 22.860 (R1), the currency closed below it after spiking up to 23.168 earlier during the day. The failure to close above the resistance could increase that levels significance going forward. After having been unable to move lower than 22.756 in the previous session, the pair found buyers again around the same price level today at 22.707. The last time this happened on Tuesday, USDMXN actually lost -2.06% on the following trading day.
With another close below the lower Bollinger Band, prices are confirming their strong downward momentum in the short-term. A rally back into the Bollinger Band on the next trading day though might signal a potential change in momentum that could lead to a correction back up towards the center of the Bollinger Bands at 23.924.
While USD/MXN is currently in a short-term downtrend, this might just be a correction, as both the medium and long-term trends are still bullish.
Among the eight market conditions that our pattern recognition engine identified today, the statistics for the Price Action based market condition "Closed below last periods low" stand out. Although it is usually interpreted as bearish, it has actually shown to be bullish for USD/MXN. Out of 625 times, USDMXN closed higher 53.92% 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 10 trading days, showing a win rate of 54.56% with an average market move of 0.28%.
With four out of the seven Major FX Pairs closing lower today, the ones that stand out on the negative side are GBPUSD losing -0.47% and EURUSD closing -0.44% lower. On the flipside the best performers have been USDCAD closing 0.33% higher and USDCHF gaining 0.08%. Looking at the other Minor FX Pairs and Crosses, the winners of the day have been USDCZK surging 1.09% and USDHUF closing 0.9% higher. The worst performers of the day have been SGDHKD tanking -0.51% and SGDJPY closing -0.5% lower. Read more