- The bias is to the downside according to the longer-term charts.
- USD/MXN bears are looking for a break of daily support structure.
The Mexican peso has been confined to a relatively narrow range from the late June business and all of July so far. This
USD/MXN, would, therefore, be expected to break out of this lull in due course and the following illustrates a bearish bias from a monthly and weekly perspective.
Monthly chart, USD/MXN
The monthly chart shows that the price broke support at the end of 2020 which opens the risk of a continuation to the downside this year.
Since doing so, the price has corrected all the way to a 61.8% Fibo at the March highs of 21.6353.
The price was subsequently rejected and the correction stalled; This in itself is bearish.
Given the combination of all this, the bias is to the downside on the monthly charts.
Weekly chart, USD/MXN
Additionally, from the weekly perspective, the bias is also bearish according to the lower weekly close 19.7458 following the lower weekly highs of 20.7138.
There has been a correction to the 38.2% Fibo that has a confluence of the 21-week EMA and resistance area between April and year to date business.
The correction would, therefore, be expected to stall and lead to a downside continuation.
However, from a daily perspective, bears will need to wait for a bearish structure for a high probability set up to the downside.
For now, the market remains bounded by support and resistance with no bias either way:
Daily chart, USD/MXN
The above illustrates the potential for the price to break the dynamic trendline support followed by price action forming a bearish structure to the downside and a subsequent break of the horizontal support structure.