The USD/MXN pair found support at a vital area after initially falling during the session on Tuesday. Because of this, we ended up forming a hammer which of course is one of my favorite signals to start going long. This is especially true when you are in an uptrend, which of course we have been. That being said, it’s been rather interesting as of late to watch this pair. However, if you match up this chart with the WTI Crude Oil market, you can see that it is the exact inverse. That’s because the Mexican peso is generally used as a proxy for crude oil.
Crude oil markets struggled during the day on Wednesday, as the $50 level seems to be a bit too much. With that, we ended up forming a hammer against the Mexican peso. I think a break above the top of this candle does offer a nice buying opportunity, because let us not forget that the Mexican peso is also a bit of a proxy for Latin America as well. With a lot of global instability as far as economics is concerned, Latin America probably doesn’t come to mind when people look to invest.
17.20
My target is actually 17.20, given enough time. I recognize that there is quite a bit of distance between here and there, but the volatility should offer buying opportunities every time we pullback. I know a lot of you don’t generally trade the Mexican peso, and I will be the first to warn you that it generally moves during North American trading. However, pip value in this particular market is pretty small, so therefore the large spread should not worry you at all. After all, when a pip is worth less than a 10th of what a major market is, a 100 pips spread is a much to worry about. That’s all you have to approaches market, think of it more or less as an investment and hold onto the trade once you start making money.
