Breaking News
Investing Pro 0
Ad-Free Version. Upgrade your Investing.com experience. Save up to 40% More details

Chart Of The Day: Mexican Peso Outshining U.S. Dollar

By Investing.com (Pinchas Cohen/Investing.com)ForexJul 19, 2018 10:01
ca.investing.com/analysis/chart-of-the-day-mexican-peso-outshining-us-dollar-200197325
Chart Of The Day: Mexican Peso Outshining U.S. Dollar
By Investing.com (Pinchas Cohen/Investing.com)   |  Jul 19, 2018 10:01
Saved. See Saved Items.
This article has already been saved in your Saved Items
 

While the world’s attention has been focused on the US dollar, there is another currency that has been strengthening against the greenback and was even able to hold its own as the dollar went on a tear: the Mexican peso.

Since June, the peso has been strengthening versus the dollar by as much as 10 percent. It was flat against the dollar since July 11 when the greenback was moving.

The recent climb by the peso follows a fall of as much as 44 percent since Donald Trump announced his presidential run in June 2015. Trump's threats to leave the NAFTA trade agreement to pursue separate, bi-lateral trade deals sparked uncertainty and weighed heavily on the currency.

Trump, however, said yesterday that the US and Mexico are "getting closer" to reaching a trade deal. Why has the Mexican peso been strengthening for a month then? Maybe some people were aware that negotiations between the two countries were in the final stages. This would help explain why the USD/MXN has been trading lower since its June 15 high, though it is easing today after yesterday's slide.

USD/MXN Daily Chart
USD/MXN Daily Chart

The currency pair has been developing a pennant pattern—a continuation pattern, complete with a downside breakout, since June 11. The pattern is shaped symmetrically, showing that both buyers and sellers are committed.

Note that the bull-bear struggle is taking place beneath the 200 DMA, right after the price crossed below it, underlining how important this level is as a support and resistance, a “red line” for both buyers and sellers.

Trading Strategies – Short Position Setup

Conservative traders would wait for a downside breakout with at least a three-percent penetration and three sessions in which the price remains below the pattern, followed by a return-move that would verify the pennant's integrity, with at least one long, red candle following a green candle.

Moderate traders might wait for just a two-percent filter, with a return-move for a better entry, but not necessarily for proof of the pattern’s resistance.

Aggressive traders might risk a short immediately, relying on the trend, the 200 DMA violation and the resistance of the top of the pennant, where it is currently trading.

Equity Management

The following trade sample could be the same for all the risk levels. The difference is not in price but in movement confirmation, as illustrated above.

  • Entry: 18.8000
  • Stop-loss: 18.8500 Risk: 500 pips
  • Target: 18.0000 Reward: 8000 pips Risk-Reward Ratio: 1:16

Chart Of The Day: Mexican Peso Outshining U.S. Dollar
 

Related Articles

Kenny Fisher
CAD Rattled By FOMC, Risk Aversion By Kenny Fisher - Aug 19, 2021

The Canadian dollar is sharply lower on Thursday, as the currency has fallen to a four-week low. Currently, USD/CAD is trading at 1.2809, up 1.18% on the day. FOMC Signals Taper Is...

Chart Of The Day: Mexican Peso Outshining U.S. Dollar

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind: 

  • Enrich the conversation
  • Stay focused and on track. Only post material that’s relevant to the topic being discussed.
  • Be respectful. Even negative opinions can be framed positively and diplomatically.
  •  Use standard writing style. Include punctuation and upper and lower cases.
  • NOTE: Spam and/or promotional messages and links within a comment will be removed
  • Avoid profanity, slander or personal attacks directed at an author or another user.
  • Don’t Monopolize the Conversation. We appreciate passion and conviction, but we also believe strongly in giving everyone a chance to air their thoughts. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.
Continue with Google
or
Sign up with Email