USDMXN Looks for a Rebound as Oversold Conditions Detected

Technical analysis of Forex market

USDMXN paused its 3-week old decline near the key 18.80 support area last week.

Meanwhile the RSI has touched its 30 oversold mark and is now looking for a rebound, whilst the fast-Stochastics have already reversed after posting a bullish cross below 20, both increasing the odds for a rebound in the price or at least ruling out the event of a steeper sell-off. The negative momentum in the MACD also seems to have slowed down, adding to the above encouraging signals.

A forceful upside move above 19.06 and the 23.6% Fibonacci of the 18.74-20.25 upleg could give the lead to the bulls, bringing the former resistance around the 61.8% Fibonacci of 19.31 back into play. Running higher, the rally could take a breather near the 50% Fibonacci of 19.50 before a bigger battle starts near the 38.2% Fibonacci of 19.67.

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Should the price retreat under the 18.80 support region, the way would open for the 18.74 bottom, a break of which could trigger more selling probably until the 18.50 barrier.

In the three-month picture, the pair is maintaining a downward direction since the peak at 20.25 and the negative slope in the 50-day simple moving average (SMA) is deflating hopes for an outlook reversal anytime soon.

Summarizing, USDMXN is searching for an upside bounce, with the 19.06 level expected to reinforce a potential move up if significantly breached. In the medium-term picture, the negative direction is likely to stay in place.