After finding strong support in the beginning of December, near the 19.705 hurdle, USD/MXN started forming higher highs and higher lows, while trading above a short-term tentative upside support line drawn from the low of December 9th. If that line stays intact, there is a good chance we could see a continuation move further north. However, in order to get a bit more comfortable with that idea, we would first like to wait for a pop above the current highest point of this week, at 20.259.
If the aforementioned upside line continues to provide decent support and the rate rises above that 20.259 barrier, this will confirm a forthcoming higher high, possibly setting up the stage for a move further north. The pair could then travel to the 20.433 hurdle, marked near the highs of November 17th and 19th, where USD/MXN might get halted for a bit. The pair may even retrace back down again, however, if the previously-discussed upside line holds the rate from dropping, the bulls could step in and drive the pair up once again. If this time USD/MXN is able to climb above the 20.433 area, the next potential target could be at 20.689, which is marked by the high of November 13th.
The RSI and the MACD are currently pointing a bit lower on our 4-hour chart, however both indicators are still in positive territories. The RSI remains above 50 and the MACD is fractionally above its trigger line, but well above zero. This picture is somewhat in support of the idea of seeing a small correction lower first and then a possible rebound from the aforementioned upside line.
Alternatively, if that upside line breaks and the rate falls below the 19.990 zone, marked by the current lowest point of this week, this may open the door for further declines, as a forthcoming lower low would be confirmed. USD/MXN may pick up more selling interest and end up sliding to the 19.818 hurdle, or to the 19.705 level, marked by the current lowest point of December.
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