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:

GBPNZD: Support Ahead, Downtrend Still in Progress

On November 2nd, GBPNZD was trading above 1.9550. As of this writing, the pair is hovering slightly below 1.8400, meaning the British pound lost over 1150 pips against the New Zealand dollar in a single month. Fortunately, the Elliott Wave Principle put traders ahead of this sharp selloff. The chart below, published on November 5th,…

Read More »

EURNZD Bulls Look Better Going into December

Yesterday, we shared our view that despite being down by over 460 pips this month, a bullish reversal can be expected in EURAUD around 1.5500. Now, we are going to take a look at EURNZD, which lost even more in November. The pair plunged from 1.7359 to 1.6515 in the last thirty days, following a…

Read More »

EURAUD Bears Getting Tired. Bullish Reversal Ahead?

With only one day left, the Euro seems poised to end November in positive territory against the U.S. dollar, following a sharp decline in October. Unfortunately for the bulls, the European currency is still losing to some of its other rivals this month. EURAUD, for example, is down by over 460 pips since the start…

Read More »

AUDUSD Looking for Support near 0.7160

AUDUSD climbed to 0.8136 in January, but similarly to other major currencies, spent the rest of 2018 declining against the U.S. dollar. The pair fell to 0.7021 on October 26th, but recovered to 0.7338 on November 16th. As of this writing, the Aussie trades at 0.7267 versus the greenback. Should we expect the downtrend to…

Read More »

USDCAD Rewards the Most Patient Among Bulls

USDCAD climbed to 1.3318 yesterday and seems determined to reach a new 2018 high. The most important reason for the decline in the Loonie is maybe the decline in the price of oil. Unlike crude’s sharp drop, however, USDCAD’s recovery did not develop so smoothly. For every step forward the bulls have been making one…

Read More »

GBPNZD: Pressure Mounts with Reversal in Place

GBPNZD has been in recovery mode for the past two years. The pair took off from 1.6705 in November 2016 and climbed to as high as 2.0470 in October 2018. The pound’s rally may seem counter-intuitive on the back of Brexit concerns in the United Kingdom, but that won’t be the first time the market…

Read More »

EURUSD Sharp U-Turn Predicted by Elliott Wave

2018 has so far been a terrible year for EURUSD bears and the month of October made no exception. The pair climbed to 1.1815 in late-September, but could not maintain the positive momentum. By October 31st it was down to 1.1302, losing over 300 pips that month alone. But in the Forex market traders cannot…

Read More »

More analyses