Over the last year the Mexican Peso (6M) downtrend has been one of the most reliable. Pullbacks have stalled out near prior swing highs and then fallen back to the downside.
The December contract hit a low of 0.05729 in September, and rallied through earlier October. This brought the price back to the region of the September swing high at 0.06072. For half of October and the start of the November the price has been hovering in the region, ranging between 0.06101 and 0.05962. Watch for a breakout of that range.
Figure 1. Mexican Peso Futures - Daily Continuous Chart
A drop below the minor range support indicates a continued slide in the Mexican Peso. Initial target is 1.5850. The conservative initial target is based on the possibility that the price could be creating an inverse head and shoulders pattern. Selling has slowed since September, and the October rally was stronger than most prior pullbacks have been.
The next downside target is 0.058. This is the price area often touched, and respected, during September. If the longer-term downtrend continues, and the prior low is breached, the target extends down to between 0.056 and 0.05450.
On the other hand, a move above the range signals at least a short-term rally. Whether it will produce enough strength to reverse the long-term downtrend is currently unknown, but a break higher is tradable. The first target is 0.0624, based on the height of the small range added to the breakout price. After that, resistance is expected in the 0.06330 region.