The USD/MXN pair fell initially during the session on Friday, but turned back around to form a hammer. The hammer is of course a bullish sign, and the fact that we formed a hammer on Thursday as well tells me that there is a good chance that we will go higher. Ultimately, I believe that the market will continue to follow what looks to be like a bit of a channel that we have been in since March. After all, it is fairly well defined and the Mexican peso is in exactly a currency that is on fire at the moment.
With this, I believe that if we break above the top of the Friday session, it’s time to start buying the US dollar and selling the Mexican peso. Keep in mind that the Mexican peso is a highly sensitive currency when it comes to the way crude oil markets act, as Mexico is an exporter of vast amounts of it. What most people don’t understand is that a lot of the offshore oil rigs in the Gulf of Mexico are actually Mexican in nature.
Buying pullbacks
I think that this trend is relatively strong and reliable, so at this point in time I am buying pullbacks as we go forward. Don’t fear trading this market, even though it is an exotic pair, the truth of the matter is that the PIP value is very small, so the spread doesn’t really matter. On top of that, it is a nice trend and that’s exactly what we look for when trading.
I know that a lot of you knew her traders won’t be bothered with the Mexican peso, but quite frankly I think you are missing out on a nice opportunity. Not everything has to revolve around the EUR/USD pair, as a lot of traders seem to think. Keep in mind that this pair is most active during North American trading, so it might sit fairly dormant during Asian and European hours. In fact, some brokers don’t even allow you to trade it outside of the North American trading hours. Regardless though, this is a longer-term type of market. If you hang onto this market long enough, it should continue to go much higher.
