In my opinion, 0.72 is really an important level and continues to be my pivot. Despite the strong move down on Friday breaking that daily long term support trend line in the daily chart, price moved up and tested yet another long term resistance line at 0.728. In my last post I stated the stochastics in the 4Hr chart were oversold, price could track back up at least to the current levels at 0.728 and retest the support turned resistance before coming down again and following the overall bear trend. I’m convinced this will be the general move and it will be good to fade the bulls now and sell at a good price and ride this protracted bear move early. The reasons for this recommendation is all from the weekly chart-check the behavior of the weekly candle and relate it most importantly to the upper BB and mark the region where this is happening. Price action is trending lower from the upper band when the stochastics are oversold and all happening at the resistance zone at 0.728. In my opinion, this is the best time to sell unless a fundamental switch happens and the USD is at the receiving end.
Back to the fundamentals and to the US presidential debate which is turning out to be a tight race. If Clinton wins, stocks and other equities rise and most importantly, Mexican Peso and Chinese Yuan are poised to gain. If you look at the USDMXN chart, you saw what happened. It gained and it will probably gain again today since there is a monetary policy meeting and a probable rate hike. The opposite is true if Trump wins, he got investors nervous this guy. Yesterday you also saw the release of CB consumer confidence which turned out to be the highest in 9 years at 104.1 and beating projections at 98.1. If consumers are confident, expect consumer spending and by extension CPI to grow and US keen on consumer expenditure, expect the Feds to solidify their reasons for a December Hike. Anyways, Yellen know that the economy is strong and data like this only confirms her assertion.
Other fundamentals for today is monthly Core Durable Goods orders at NY Open at -0.5%e from last month’s 1.5% and Crude Oil inventories later on at 1430GMT at 2.4Me from last week’s 6.2M inventories shortage.
So trade as follows:
Sell Limit: 0.728-0.731-falls between yesterday’s highs and 61.8 Fibonacci Level. Initiate with an overbought stochastics with a confirmation candle in the 15 min chart.
Take Profit: Trail your profits.
Otherwise, trade carefully and conserve your precious capital. Fade the USD Bulls in today’s USDMXN. It will be profitable.