During the day on Thursday, we saw the US dollar fall a bit against the Mexican peso, but we did also see the 18 handle offer a bit of support yet again. This is an area that I have marked on the charting you can clearly see how it has caused a reaction several times in both supportive and negative roles. Because of this, the market looks as if it is entering a fairly significant pivot point if you will, and we will have to make some type of decision as to which direction we are going to go. Remember, the Mexican peso is highly leveraged to the oil markets, as Mexico is a net exporter of petroleum.
Long-term trades
The market does tend to be one that lends itself to be traded on the longer-term charts though, because the spread is a bit high. However, you have to keep in mind that the PIP value is very small, so it all works out in the end. You have to be okay with the idea of a 40 or more pips spread, but at the end of the day the market tends to be very technical and its nature, just as the oil market is.
With this being the case, I have recognized that we have formed a couple of hammers and a shooting star of the last 3 sessions. With this being the case it’s likely that we are going to have to make a decision. If we can break above the top of the shooting star from the Wednesday session, I would be more than willing to go long as I think the market would then reach towards the 19 handle, a sizable move. Pay attention to the oil markets though, does oil needs the pullback in order to make this a believable bounce. On the other hand, if we break down below the bottom of the hammer from the Tuesday session, this market could very well fall to the 17 handle.
