Hasta La Vista, Mexican Peso
Peter Brandt | Nov 29, 2014 11:43PM ET
Before I even begin, allow me to define terms. Being bullish on the USD/MXN (spot) is the exact same thing as being bearish on the Mexican peso (which is actually expressed as MXN/USD in futures trading). USD/MXN expresses the number of pesos per USD. MXN/USD is the value of the peso in dollar terms.
As I write this, the USD/MXN is trading at 13.750X, or 13.75 pesos per one USD. The MXN/USD trades at a reciprocal of USD/MXN. Thus, 100 divided by 13.750 equals $.07273, meaning that a peso is worth just over 7 cents.
When I stared trading currencies at the IMM in the 1970s the peso was worth about $.8006. Thus, in just shy of 40 years the peso has declined in value against theUSD by 90%. The chart below reflects MXN/USD.
I believe the peso is due for another decline against the USD. The weekly graph of MXN/USD displays a possible 56-month symmetrical triangle.
My weekly graph of the USD/MXN goes back further, so the symmetrical triangle can be seen in better perspective.
Remember, a bear move in the peso (MXN/USD) is the equivalent of a bull move in dollar/peso.
I have commented frequently on the potential for a much stronger USD/MXN (same thing as a weak peso) in recent months. My thought was that the peso will have another decisive leg down (this means bullish on USD/MXN) in 2015. Well, 2015 may be upon us. The lower boundary of the massive triangle is being challenged.
Get The News You Want
The daily chart shows the position of the price and the boundary line. Note the small 6-week descending triangle.
I am monitoring this market for a shorting opportunity. My target for the peso is toward $.0510
Disclosure: The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.