USDMXN is not going to climb up forever right?
Today’s analysis will focus on the USDMXN, which we discussed very often in our trading sniper videos during September. Back then, the price was locked inside the symmetric triangle pattern (orange lines) and we were waiting for a breakout. As anticipated, the breakout happened and it was bullish. What is more, it was very strong so the triangle did its job.
Is the situation still bullish here? When we look only at October, we have to say yes. A long position on the USDMXN was one of the best trades on the market. If we look in a bit longer term, we can see that the price is approaching a very important resistance, which may trigger a bearish reversal (taking profit action). It is the 38,2% Fibonacci retracement along with the resistance created by the tops from March, April, and May. After such a strong upswing, the take profit action is more than welcomed here and the blue area looks like a perfect place to do it.
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Currently, the short-term sentiment is positive. It looks like the gravity will act and the price will eventually reach the 19.23 mark. What will happen after that is currently random and depends on the price action there? Breakout will open a way to the 50% Fibonacci. Bearish reversal pattern should trigger a correction.
This article is written by Tomasz Wisniewski, a senior analyst at Alpari Research & Analysis