Dont buy your pesos yet
I dont believe the Mexican peso will stay strong into December as the 20 week cycle rolls back over. It had a technical bounce from the prepandemic shelf on 6M futures (shown below).
It does, however, show that the carry trade is not dead. However, Banxico said its done a while back, so, this price action is a chance to sell into strength.
Ultimately, a move back to 18.50 Mexican peso, is in the works… but with bonds moving higher out of this 20 week cycle trough on $TLT, there will be alot of whipsaw as persons flee weak assets.
TLT: IT HAS POTENTIAL TO PRESS AS BUYERS WANT MEAN REVERSION TEMPORARILY.
This will weaken the Peso as persons search for bonds to move back to their breakdown areas on monthly chart.
The peso sits at 17.40 but I think November and December will weaken it to 18 and then 19 as shown by the long term chart here:
The 9 year valid down trendline from 2012 peak to 2021 was broken up by price, signalling 18 year low is in on 6M futures but a move back into value from 2021 to 2022 is inevitable, as is .. AT LEAST TOUCHING THE PURPLE 80 WEEK VTL FROM 2020 LOW, SEEN ABOVE.
Edit: Thursday 9 November
Theres the 80 day peak suggested in my post.
Cycles work better if aligned with fundamental news. An analyst trader of experience knows this.
Derek
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