Mexican Economic Development Plunges 6.65% Amid High-Volume Selloff

Mexican Economic Development (FMX) declined sharply by 6.65% in the latest session, closing at 92.04 after trading between 91 and 96.035 on elevated volume. This significant drop sets a bearish tone for the analysis.
Candlestick Theory
The recent candlestick displays a long bearish marubozu-like pattern, closing near its low after a substantial gap down from the prior session’s high of 98.6. This breakaway gap signals strong selling pressure and a potential acceleration of the downtrend. Key support now resides at the session’s low of 91, with resistance near the gap zone (96.035–98.6). A breach of 91 may expose the psychological 90 level and the February 2025 trough near 85.
Moving Average Theory
The stock trades below all key moving averages (50-day ≈ 101, 100-day ≈ 98, 200-day ≈ 96), confirming a bearish trend structure. The 50-day MA has crossed below the 100-day and 200-day MAs, reflecting deteriorating momentum. This alignment suggests sustained downward pressure, with the MAs now acting as dynamic resistance layers.
MACD & KDJ Indicators
The MACD (12,26,9) shows a deepening negative histogram, with the signal line entrenched below zero, indicating bearish momentum is strengthening. KDJ (14,3,3) oscillators are deeply oversold (K and D below 20), yet no bullish crossover has materialized. While oversold, the absence of divergence warns against premature reversal expectations, as momentum remains skewed downward.
Bollinger Bands
Bands have expanded sharply, with the price touching the lower band—reflecting a surge in volatility. This expansion during a breakdown is typically bearish, suggesting continuation potential. A close above the lower band may offer short-term relief, but sustained lower-band proximity implies ongoing distribution.
Volume-Price Relationship
The selloff was validated by a volume surge (~2.1M shares, over 3× the 30-day average), indicating capitulation. Prior high-volume reversals (e.g., July 17’s 2.37M-share rally) failed to gain traction, underscoring weak demand. Distribution days now dominate, reinforcing the downtrend’s sustainability.
Relative Strength Index (RSI)
The 14-day RSI has plunged to ~25, deep in oversold territory. Historically, readings below 30 have preceded tactical bounces. However, the sharp decline without bullish divergence suggests caution—oversold conditions can persist in strong downtrends, limiting predictive power for trend reversals.
Fibonacci Retracement
Applying Fib levels to the uptrend from February’s low (85.1) to May’s peak (108.74), the current price (92.04) has breached the 78.6% retracement at 90.16, with the low at 91 nearly testing this level. The 100% retracement (85.1) is now in focus. Minor resistance aligns with the 61.8% level (94.13).
Confluence and Divergence
Confluence is observed in bearish signals: price below all MAs, high-volume breakdown, and MACD/KDJ momentum deterioration. The oversold RSI and proximity to the 78.6% Fib support hint at potential stabilization, yet this lacks confirmation from volume or candlestick reversal patterns. Divergence is absent; momentum and price are aligned in their descent. The weight of evidence favors downward continuation, though oversold conditions may elevate near-term bounce probability, particularly if 91 holds. Vigilance for reversal confirmation at support remains warranted.