After reversing higher in the biggening of last week, USD/MXN continues to form higher lows and higher highs, while trading above a short-term tentative upside support line taken from the low of April 19th. Today, after finding resistance near the 20.484 hurdle, the pair started selling off. Nevertheless, as long as the rate stays above that upside line, we will stay positive with the near-term outlook.
A drop lower, but a failure to break below the aforementioned upside line, may result in the pair rebounding back to the upside. USD/MXN could drift back to the current highest point of April, at 20.484. Initially, we might see a hold-up around there, but if the bulls continue to have the upper hand, they may push the rate further north, where the next resistance target could be at 20.664. Marked by the high of March 17th.
Currently, the RSI and the MACD are both pointing lower. That said, the RSI remains above 50 and the MACD is still above zero and the signal line. Overall, both indicators show positive price momentum, which supports the above-discussed scenario.
Alternatively, a break of the previously mentioned upside line and a rate-drop below the 20.199 hurdle, marked by the low of April 22nd, may signal a change in the direction of the current trend. USD/MXN could fall to the 20.082 obstacle, a break of which might set the stage for a move to the 19.945 level, marked by the low of April 20th.
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