USDMXN is printing a bearish candle in the four-hour chart after creating a gravestone doji, signaling the continuation of the negative correction. The RSI has also reversed south after peaking slightly below its 70 oversold level, providing additional discouraging signals for the near-term. Yet, as long as the RSI hovers above its 50-neutral mark, any weakness could appear short-lived.
On the way down, the 20-period simple moving average (SMA) could curb bearish actions ahead of the ascending trend-line which is currently near the 50-period SMA (19.87). Crossing that line, the market could slow down around the 19.75 barrier, while beneath that, the spotlight will turn to the bottom of the Ichimoku cloud at 19.62. Any step lower would put the upward pattern into question.
A bounce above today’s eight-month peak of 20.25 could last until the 20.50-20.65 area identified by the December highs. Another bullish move could also challenge the 2018 top of 20.95.
In the bigger picture, the higher highs and the higher lows registered this month and the bullish cross between the 50- and the 200-period SMAs keep the outlook positive.
Summarizing, USDMXN is likely to face some pressure in the short-term, though the weakness may not be enough to change the positive outlook in the bigger picture unless the market closes significantly below 19.62.
