CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 69% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
Open account
☰
CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 69% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
Open account
✖

EURMXN may be Ready to Reverse

September 12, 2019 5:40 PM

EUR/MXN may be Ready to Reverse

With the ECB cutting rates and surprising the markets with the more dovish QE announcement (see ECB recap here), one would expect EUR pairs to be near their lows.  However roughly a half hour after the EUR selloff, many of the EUR pairs reversed and went bid.  The EUR/USD was one of those pairs that reversed, which caused DXY to also reverse back to levels prior to the announcement.  Therefore, many EUR and USD pairs put in reversal candles on daily timeframes:

EUR/USD


Source: Tradingview, City Index

AUD/USD


Source: Tradingview, City Index

EUR/NZD


Source: Tradingview, City Index

However, none seemed to have had quite as large of a possible reversal signal as the EUR/MXN, which put in a hammer near the bottom of the 2019 trading range on a daily timeframe.

Source: Tradingview, City Index

The pair has been trading in a falling wedge for the last week, as seen on a 240 min timeframe.  Today, the pair put in a false breakdown into a support zone. It then proceeded to bounce out of the support area and test the upper end of the falling wedge. 

Source: Tradingview, City Index

If the hammer on the daily is any indication of a potential reversal, EUR/MXN may be ready to break out of the wedge.  The target for the breakout of a wedge is a 100% retracement of the entire wedge, which is 21.82.  First resistance comes in at 21.59 (horizontal resistance).  First support is today’s lows at 21.45.  Below that, support is the horizontal channel line at 21.07.

Data for Europe and Mexico is light tomorrow.  Pending any unexpected headlines or tweets,  EUR/MXN many continue to trade off technicals into the weekend.


StoneX Financial Ltd (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.

No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.

For further details see our full non-independent research disclaimer and quarterly summary.

CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 69% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money. CFD and Forex Trading are leveraged products and your capital is at risk. They may not be suitable for everyone. Please ensure you fully understand the risks involved by reading our full risk warning.

City Index is a trading name of StoneX Financial Ltd. Head and Registered Office: 1st Floor, Moor House, 120 London Wall, London, EC2Y 5ET. StoneX Financial Ltd is a company registered in England and Wales, number: 05616586. Authorised and regulated by the Financial Conduct Authority. FCA Register Number: 446717.

City Index is a trademark of StoneX Financial Ltd.

The information on this website is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement.

© City Index 2024