Equity markets were very heavy yesterday
Ichimoku Kinko Hyo EUR/JPY: The EUR/JPY pair is now testing the lower level of the cloud…
USD/MXN: another wave down
Information is not investment advice
Impression
Have a look at this layout: USD/MXN crossed all the MAs to reach 20.00. Looks spectacular to suggest a tactical trend change, doesn't it? Well, most probably it's not. As we pointed out in the previous article on exotics (https://bit.ly/2Yaufc5), these currencies are notably volatile and weak against the USD, that's why fluctuations such as the one you see here are pretty normal. Besides, it was recently announced that Mexican President Lopez Obrador got infected with the virus - that's a plausible reason for a national currency to temporarily get emotional and lose some value. Strategically, if you look at the daily and weekly charts, you'll see that there is still a lot of room to the downside before USD/MXN should be expected to take on its normal upward trajectory.
Trade tactics
Therefore, tactically, the expectation is that USD/MXN goes down to 19.55 crossing all the MAs downwards.
For the first downward wave (1), 19.65-19.70 seems to be an appropriate Take Profit level to set if you open a Sell position while USD/MXN is around 19.90.
Down there, at 19.70, once and if you see a local bullish reversal after a drop, re-group and prepare for another wave downwards (2) to break the support of 19.55.
The MAs are very convenient orientation and reversal references.
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