Author Topic: Updated USD/MXN long outlook: US Oil, futures, RSI and more  (Read 1193 times)

PipMeHappy

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Updated USD/MXN long outlook: US Oil, futures, RSI and more
« on: November 23, 2020, 11:33:35 AM »


Hello traders!

I hope you are doing okay in these stressful times.

I have been monitoring my USD/MXN long (now in drawdown) and checking again that I have my facts right:
is it a good idea? The timing of it maybe stinks (got in too early?) but the general idea seems sound.

Today I look at:
- US Oil and MXN correlation in the last ten years, and where in the correlation window we are positioned at present;
- ATR performance of USD/MXN versus price movement;
- RSI over several time-frames, showing a distinct bottoming out that is negating the downtrend in USD/MXN;
- MXN/USD (CME) futures (expiry: December 2020) contracts show an hourly buy volume divergence from the price rally since 19th November;
- confluence of technical levels (Fib. 0.76 retracement of the 'pandemic swing' earlier this year; long-term resistance from 2018 and 2019, turned support;
   long-term rising trendline on the monthly chart).

All of these seem to suggest that we could be at a turning point; the answer is whether the sellers will fold their positions and thus generate a reversal by
a lack of selling positions, or whether buyers will force that reversal; also, fundamentals may kick in, but as the analyst quoted in the Reuters article (that
I show in my video) says, it is no longer about fundamentals but about a carry trade that attracts the Mxn. Peso buying.

Take care and see you in my next.
As John Kicklighter (Daily FX) likes to say at the end of his videos: "Good luck trading out there".
PipMeHappy

PipMeHappy

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Re: Updated USD/MXN long outlook: US Oil, futures, RSI and more
« Reply #1 on: November 23, 2020, 07:00:08 PM »
Great turnaround...

After making the video, a hammer formation
appeared and it looks like I was pretty good
at getting the support level right, which is
great especially after a price drop spanning
over 57000 pips!!

Also, after making the video, futures opened
the Chicago session and you can see what happened
on the hourly chart: lots of Peso selling, confirmed by
sustained volume.The divergence of price and volume
in the rally from last week was giving all the warnings
one would need.