Argentina's Woes Continue
Joe Perry August 29, 2019 8:15 PM
Today the Argentinean government asked the IMF to restructure a $57 billion loan
Three weeks ago, Argentina President Mauricio Macri unexpectedly a primary election lost by a landslide to leftist Alberto Fernandez. At that time, the Argentinean Peso went into a tailspin and dropped from 45.23 pesos per US Dollar to 52.14 pesos per US Dollar. At one point during the day, it went as low as 61.995 pesos per day.
Today the Argentinean government asked the IMF to restructure a $57 billion loan from last year that was used to help bail the country out during a recession. Yesterday, The Central Bank bought $300 million in pesos to help try and stabilize the market.
Perhaps the Argentinean President asked for the restructuring of the IMF bailout loan TODAY because he noticed that the Argentina Peso was breaking out of a bullish pennant formation (a picture perfect one, I might add).
Source: Tradingview, FOREX.com
After the breakout 3 weeks ago, the USD/ARS pulled back to the 61.8% retracement of the entire move to 51.64. The pair resumed trading higher and began to break out of the triangle earlier today at 55.59 but pulled back in and held support near 56.00. USD/ARS is currently trading near 57.86. 56.00 will be key support for the pair. Next support will be 52.80, which will be the rising trendline of the pennant. Immediate resistance comes in at 60.00, todays high. After that, resistance is at the recent high at 61.995. However, the target for the pennant is all the way up at 76.25. To get the target for the pennant, you take the length of the “pole” for the pennant and add it to the breakout point.
The USD/ARS is an illiquid currency and may not be available for all to trade. Howver, Emerging Market currencies tend to be somewhat correlated, so another option to trade could be the USD/MXN. On August 19th, we wrote about possibilities for the USD/MXN. This pair happened to be in a symmetrical triangle, and it was noted to watch the downward sloping trendline near 20.15.
Source: Tradingview, FOREX.com
Today, the pair broke above the triangle and traded as high as 20.2561. However, as with the USD/ARS, the USD/MXN pulled back inside the triangle formation and created a shooting star formation on a daily chart. First support comes in at prior resistance near 19.85. Prior resistance may hold price above that level, therefore acting support. Below that, price can move down to 19.36, which is the 50% move of the prior structure. First resistance is at todays highs of 20.25. Next resistance is at prior highs of 20.65. If price gets to that point, the pair will be well above the triangle and could have further room to run.
Disclaimer: The information on this web site is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement. The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency or CFD contract. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. Any references to historical price movements or levels is informational based on our analysis and we do not represent or warranty that any such movements or levels are likely to reoccur in the future. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.
Futures, Options on Futures, Foreign Exchange and other leveraged products involves significant risk of loss and is not suitable for all investors. Losses can exceed your deposits. Increasing leverage increases risk. Spot Gold and Silver contracts are not subject to regulation under the U.S. Commodity Exchange Act. Contracts for Difference (CFDs) are not available for US residents. Before deciding to trade forex and commodity futures, you should carefully consider your financial objectives, level of experience and risk appetite. Any opinions, news, research, analyses, prices or other information contained herein is intended as general information about the subject matter covered and is provided with the understanding that we do not provide any investment, legal, or tax advice. You should consult with appropriate counsel or other advisors on all investment, legal, or tax matters. References to Forex.com or GAIN Capital refer to GAIN Capital Holdings Inc. and its subsidiaries. Please read Characteristics and Risks of Standardized Options.