Technical Analsys
Technical Analysis And XAG/MXN : 2019-05-14
Getting Ready For The Bank Of Mexico Meeting
In this review, we suggest to consider the Silver vs. MXN personal composite instrument (PCI). It reflects the price dynamics of silver against the Mexican peso. Will the XAG/MXN quotations grow?
Such dynamics means the rise in silver prices and the weakening of the Mexican peso. May 16, 2019 will be the next meeting of the Bank of Mexico. According to futures quotes, the probability of a rate reduction exceeds 75%. This can have a negative effect on peso dynamics. Inflation in Mexico is 4.41% in annual terms, which is above the target range of the Bank of Mexico (3% plus or minus 1%). However, the current rate is almost 2 times higher than this indicator and is now equal to 8.25%. It is expected to decrease to 8%. In turn, precious metals are becoming more expensive against the backdrop of increasing global political risks and another exacerbation of the US-Chinese trade war.
On the daily timeframe, XAG/MXN: D1 adjusted to the top of a 6-month low. It approached the resistance line of the downward trend, which needs to be pushed upward before opening a buy position. Most of the technical analysis indicators showed an uptrend signal. Further growth is possible if high demand for precious metals remains and the Bank of Mexico rate decreases.
The Parabolic indicator demonstrates the signal to decrease. It can be used as a resistance level that must be overcome before opening a buy position.
The Bollinger® bands narrowed, indicating volatility decrease. The bottom line of Bollinger has a slope up.
The RSI indicator is above the 50 mark. It has formed a divergence to the rise.
The MACD indicator indicates a signal to increase.
The bullish momentum may develop if XAG/MXN will exceed its last two upper fractals, the Parabolic signal, the 200-day moving average line and the upper Bollinger line: 288.This level may serve as an entry point. The initial stop loss may be placed below the last lower fractal, the bottom Bollinger line and the 6-month minimum: 276. After opening the pending order, we shall move the stop to the next fractal low following the Bollinger and Parabolic signals to the next fractal minimum. Thus, we are changing the potential profit/loss to the breakeven point. More risk-averse traders may switch to the 4-hour chart after the trade and place there a stop loss moving it in the direction of the trade. If the price meets the stop level (276) without reaching the order (288), we recommend to close the position: the market sustains internal changes that were not taken into account.
Summary Of Technical Analysis
- Position Buy
- Buy stop Above 288
- Stop loss Below 276
Market Overview
Global Equities Tumble As China Retaliates To U.S. Tariffs
US Stocks Drop After China Announces Tariffs On $60B U.S. Imports
US stock market pulled back on Monday as US-China trade dispute tensions rose after China imposed retaliatory tariffs on $60 billion worth of imports from US following US hike of tariffs Friday on $200 billion of imports from China to 25% from 10%. The S&P 500 lost 2.4% to 2811.87. Dow Jones industrial tumbled 2.4% to 25324.99. ThedollarNASDAQ Composite dropped 3.4% to 7647.02. The dollar weakening reversed: the live dollar index data show the ICE (NYSE:ICE) US Dollar index, a measure of the dollar’s strength against a basket of six rival currencies, rose 0.05% to 97.34 but is lower currently. Futures on US stock indexes point to higher openings today.
DAX 30 Suffers Heaviest Loss Among European Indexes
European stocks slumped on Monday after Beijing’s announcement it imposed duties on $60 billion worth of imports from US. EUR/USD joined GBP/USD’s slide with euro turning higher against dollar currently while Pound continues its slide. The Stoxx Europe 600 index declined 1.2% with utility shares the only sector which avoided losses. The DAX 30 dropped 1.5% to 11876.65. France’s CAC 40 tumbled 1.2%. UK’s FTSE 100 lost 0.6% to 7163.68.
Hang Seng Leads Asian indexes Losses
Asian stock indices are extending losses today. Nikkei closed 0.6% lower at 21067.23 despite renewed yen slide against the dollar. Markets in China are solidly lower with no date set for continuing trade talks with US after negotiations ended last Friday with no deal: the Shanghai Composite Index is down 0.7% and Hong Kong’s Hang Seng Index is 1.8% lower. Australia’s All Ordinaries Index extended losses 0.9% as Australian dollar resumed climb against the greenback as business sentiment remained subdued in April according to business confidence index of the National Australia Bank.
Brent Up
Brent futures prices are edging higher today with global markets slump capping gains. Prices fell yesterday despite a rise in Middle East tensions on news of ‘sabotage’ attacks on Saudi oil tankers in Strait of Hormuz: July Brent crude lost 0.6% to $70.23 a barrel on Monday.