USD/MXN Elliott Wave Outlook: Corrective Recovery In Focus

USD/MXN has been in a well-defined downtrend since the beginning of 2025, when we identified a major top formation. The pair has since developed a clear five-wave impulsive decline, characterized by consistent lower highs and lower swing lows — confirming strong bearish momentum.

Recently, we observed the completion of wave 5, marking the end of wave A within a larger corrective structure. Following that low, price has staged a sharp recovery and broken back above the descending channel resistance, signaling a potential shift in momentum.

USDMXN Daily Chart

This breakout suggests that wave B of a higher-degree ABC corrective pattern is now underway. If this scenario unfolds as expected, the recovery could extend toward the 18.77 resistance area. Since corrective waves often develop in complex formations, this upward move may take time and unfold in multiple internal swings before completion.

Key Level to Watch:

• Resistance: 18.77

• Structure: ABC corrective recovery (wave B in progress)

On the intraday timeframe, USD/MXN is showing strong bullish momentum. The current advance appears to be forming a five-wave impulsive structure to the upside, with wave 3 currently in progress — typically the strongest and most dynamic leg of an impulse.

Within wave 3, price action suggests that subwave iii may have already extended, and a temporary pullback in subwave iv could occur before another push higher in subwave v of 3.

USDMXN 4H Chart

This implies that short-term dips may present opportunities for continuation toward higher levels, in alignment with the broader daily corrective recovery.

Short-Term Outlook:

• Bullish intraday bias

• Watching for wave iv pullback

• Further upside expected in wave v of 3

Overall, the larger bearish trend may still be intact from a higher-degree perspective, but the current recovery phase suggests upside potential in the near term before the broader downtrend potentially resumes.