After a very sharp and extended move up on USDMXN from 2014 through 2016, the currency pair have been trading sideways.
And the formation is a triangle pattern.
A lot of non-Elliott Wave oriented traders would see this as a continuation pattern. This is fine, but from an Elliott Wave perspective I assume that contracting range is part of a weakness that is taking the currency pair away from 22.00 high.
Why? Because I see first drop on USDMXN from 2017 high being very sharp and strong; to me, it looks like an impulse. So I labeled it as wave A that belongs to an ongoing and deeper wave four correction.
If I am not mistaken, then this fourth wave should be made by A-B-C waves.
But why I think this pair can be interesting now is because B-wave triangle appears to be coming to an end.
I really like that price action on a daily chart (see below) where drop from 20.25 to 19.31 is impulsive so it suggests that a three wave rise from April 2019 low is completed. And the best part is that even if consolidation will not be broken yet, I still think that the lower side of the range will be retested around 19.00 which is my minimum downward objective.
After any sharp drop below 18.75 I would start looking for aggressive drop lower into wave C. Any rise above 20.25 would invalidate my current view, and that’s also the price where I could start considering more direct-bullish interpretations.
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The authors may have a position in the mentioned securities at the time of publication. Any opinions expressed herein are solely those of the author, and do not in any way represent the views or opinions of any other person or entity.