Bullish retracement to guide USD/MXN
Ultimate highs at 21.96 sent USD/MXN packing in a double top formation, and the cross has been trading on a slip ever since. Trend-lines switched slopes, but the pair managed to remain inside the bounds of a channel down pattern for a month, losing amplitude for lows just recently, and creating a bullish setup. Due to the fact that the pair has just broken a bearish rising broadening wedge pattern on the larger time-frame and should call for a retracement of the area before a major downfall (on the monthly and weekly charts), we would look for bulls to extend the takeover until early April – the scenario is currently consistent with all technical aspects that we have reviewed. A slight abandonment of the wedge bottom boundary and some signs of stickiness on the upside suggest that the pair might break the wedge immediately, meaning that tests of 18.87 are most likely to be successful, leading to a correction and a rally after that. The area is, however, strengthened by 18.89, the Fibo Expansion, and might take some more tests to break. We see 19.28 as the upside target for the current wave north.
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