EURMXN is at wedge support, but there is a risk!

Usually I am a buyer of descending (or falling) wedges when we reach support as I typically would be looking for an eventual breakout higher. However, this time may be different. The reason why is as we are hitting support, the pair is also trading below the long term 61.8% Fibonacci retracement of the February 2020 lows (pre covid) to the April 2020 highs (post covid lockdown). The MXN has outperformed during a “risk off” market recently which is also a risk, especially if stocks overall maintain stability or rally. For now, while below the 200dma I will remain bearish the EURMXN unless we see a major breakdown of equity markets globally.

Blake Morrow