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Price Signal Summary: USDCLP Trend Needle Still Points South

LATAM FX
  • USDMXN is largely unchanged and continues to consolidate. The outlook is bearish and further downside is likely near-term. A bearish theme follows the sell-off since Nov 26. Short-lived corrective spells during the downtrend clearly highlight bearish sentiment. Furthermore, a sequence of lower lows and lower highs remains intact. Attention is on the support at 20.2517, Nov 9 low and 20.1196, Oct 26 low. The latter is a key support. On the upside, resistance is seen at 20.7603, Jan 6 high where a break would suggest a base and confirm a break of the 50-day EMA.
  • USDBRL is also consolidating and remains just above its recent lows. A bearish short-term risk is still present following recent weakness and the break of support at 5.5477, Dec 30 low. The pair has also recently cleared the 20- and 50-day EMAs. The breach of these various support levels (including a recent print below 5.5184, Dec 9 low) suggests scope for a deeper short-term pullback. A clear break of 5.5184 would open 5.3885, Nov 11 low. Key resistance is unchanged at 5.7563, Dec 21 high. Initial resistance is at 5.6035, the 20-day EMA.
  • USDCLP remains in a bear cycle and further weakness is likely near-term. The recent leg lower has resulted in a breach of trendline support drawn from the May 10, 2021 low and a break of the 50-day EMA. This suggests scope for a pullback towards 798.65 next, Nov 22 low. For bulls, a resumption of gains would open the bull trigger at 876.15, the Dec 20 high. Initial firm resistance however is at 834.37, the 20-day EMA.
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