Technical outlook:

USDMXN climbed above the 20.16 high during the New York session on Tuesday, falling in line with our discussions and earlier forecast. The currency pair has completed a bullish Morning Star candlestick pattern after terminating at around the 19.80 lows early this week. Bulls now remain inclined to hold prices above 19.80 to keep the momentum intact.

USDMXN has been dropping since November 2021 after printing highs at about 22.15 as seen on the daily chart here. The currency pair has either completed a diagonal or it is into its last leg lower below 19.40. A break below 19.80 from here will confirm that prices are heading further south towards 19.00 and beyond.

On the flip side, if 19.80 holds well, the next leg is expected to be a sharp rally towards 21.50 and higher as bulls tighten their grip. Also, note that prices are bouncing from the Fibonacci 0.618 retracement of the recent upswing between 19.40 and 20.70. Hence, the probability of a bullish reversal remains high.

Trading plan:

Potential rally through 21.50 against 19.00

Good luck!