close icon

USDMXN: Is the 18.50 Support Going to Hold?

It has been over two months since our last article about USDMXN. On July 27th, the Forex pair was trading slightly above 18.6150. The Elliott Wave Principle then suggested “a corrective rally to 19.50 – 20.00 is about to interrupt the downtrend in the near future.

The logic behind our optimism was simple: there was a perfect five-wave impulse to the downside from 20.96 to 18.58. According to the theory, a three-wave correction in the opposite direction follows every impulse. Elliott wave analysis is best understood visually, so let’s take a look at the chart below to refresh our memory.
USDMXN Elliott wave chart analysis
Ah, right, there was also a bullish RSI divergence between waves 3 and 5 of (1/A), which further supported the short-term positive outlook. On the other hand, once the anticipated recovery in wave (2/B) was over, the entire 5-3 wave cycle would be complete. The bears were supposed to return shortly after. Today is October 1st and here is an updated chart of USDMXN.
USDMXN Elliott wave forecast update
Wave (1/A) extended its slide to 18.4046 by August 7th. And just when it seemed like nothing can stop the pair’s selloff, the bulls suddenly came back. Wave (2/B) developed as a simple a-b-c zigzag and lifted the U.S. dollar to 19.6868 against the Mexican Peso on September 5th.

Unfortunately for the bulls, wave (2/B) did not even last a whole month. As of this writing, USDMXN is hovering around 18.50 and is approaching the support area of wave 5 of (1/A). Support and resistance levels can be quite useful in trading, but traders relying on this particular support to lift USDMXN may be up for an unpleasant surprise.

Since wave (1/A) was a five-wave impulse, wave (3/C) should also evolve into one. The support line drawn through the lows of waves 5 of (1/A) and “b” of (2/B) has already been breached and turned into resistance by waves 1 and 2 of (3/C). This means the pair is most likely in wave 3 of (3/C) now.

Third waves are usually the fastest and strongest phase of the impulse pattern, which means 18.50 is probably not going to hold the bears much longer. USDMXN can be expected to keep losing ground and eventually plunge to the 17.0000 mark in the weeks ahead.

Did you like this analysis? Our Elliott Wave Video Course can teach you how to uncover similar opportunities yourself!

Stay informed with our newsletter

Latest Elliott Wave analysis on different topics delivered to you weekly.

Privacy policy
You may also like:

USDCAD and the Anatomy of a Deceiving Correction

In late-September, 2021, USDCAD had already spent over two months in a narrowing sideways range. Despite occasionally breaching the 1.2900 mark during that time, the pair was unable to close a daily session above it. Neither was it able to significantly breach 1.2500. When it comes to narrowing range-bound movements, there is one Elliott Wave…

Read More »

GBPJPY Recovery Takes Shape of an Impulse Pattern

Less than two years ago, during the coronavirus market panic, GBPJPY fell to a multi-year low of 124.04. The last time the pair traded at such levels was in August, 2012, when the world was still recovering from the Financial Crisis. The Covid-19 selloff didn’t last that long though. After plunging 10.9% in March 2020…

Read More »

USDCAD Rises in Predictable Elliott Wave Manner

USDCAD rose significantly this past week, climbing from 1.2512 at the open to as high as 1.2949 Friday. The surge can be attributed to the slide in crude oil prices. Oil and USDCAD are known to have an inverse correlation due to the heavy reliance of the Canada’s economy on the commodity. And while the…

Read More »

Two Months Ahead of the 400-Pip Slide in EURUSD

Economic and fiscal steps taken to help the global economy rebound from the COVID-19 crisis are still in effect in both U.S. and EU. The amount of stimulus by the Fed far eclipsed the measures taken by the ECB. Direct unemployment payments are even creating a labor shortage. Many people prefer to rely on government…

Read More »

Elliott Wave Support Can Send USDZAR 15% Higher

It’s been a bad year for USDZAR bulls. The pair has been declining ever since it reached a high of 19.34 in early-April 2020. As of this writing, it is barely holding above 14.30, down 26% in a little over twelve months. Does this mean now is a good time to join the bears? We…

Read More »

Ahead of EURUSD ‘s Disappointing Start to 2021

Overall, 2020 was a good year for EURUSD bulls. Despite the March crash during the coronavirus-related volatility, the pair ended the year up almost 9%. With more stimulus already in the pipeline at the start of 2021, it made sense to expect further devaluation of the dollar against the Euro. Alas, common sense doesn’t always…

Read More »

USDJPY Gains 450 Pips and Counting in Two Months

2020 wasn’t a good year for USDJPY bulls. Starting from 108.63 in January, the pair closed at 103.32 on December 31st, down 4.9% in twelve months. But what the dollar lost against the yen in the entire 2020 it is now close to recouping in less than three months. USDJPY is approaching 108.50 as of…

Read More »

More analyses