The US dollar fell again against the Mexican peso during the session on Thursday as the 18.50 level offers quite a bit of resistance. We also have the 50-day exponential moving average at this area, and as a result we could very well see some dynamic resistance due to that fact. With this being the case, looks like we could continue to fall and a break below the bottom of the range for the day could be a decent selling opportunity. On top of that, it looks as if oil is starting to gain a little bit of strength, and that of course is good for the Mexican peso as Mexico is a midrange exporter of crude oil in general.
While most Forex traders don’t necessarily trade the Mexican peso based upon fundamentals, they do use and as a proxy for crude oil. It is likely going to be a relatively quiet move lower, because of the supportive action that we’ve seen recently. However, I think that eventually this market could reach as low as 18.00, which is a fairly significant move in this particular currency pair.
Larger spreads
Keep in mind that the spreads our larger in this market, but ultimately the PIP value is so small that it doesn’t matter. A 50 pip spread is possible depending on which broker here using, but keep in mind that the tick value is so small it really doesn’t translate into much of a change. You have to keep in mind also that this is a marketing tend to trade for several days at a time, because the volatility is pretty extreme on the short-term charts. You have to look at this as a market that you trade at the very least as a “swing trade.”
It does look as the US dollar has world over a bit recently, and the shooting star that we formed on Wednesday could very well have been the testing of the bottom of the previous uptrend line if you use a little bit of imagination.
