- EUR/MXN appears to be breaking out of the top of a Bull Flag price pattern.
- Such patterns signal the likelihood of more upside evolving.
EUR/MXN is in a medium and long-term uptrend within which it appears to have completed a Bull Flag continuation pattern. These patterns are bullish and are composed of a steep rally, known as the “flagpole”, followed by a rectangular or square consolidation phase, called the “flag square”.
EUR/MXN Daily Chart
In the case of EUR/MXN the flagpole probably began life on August 15, leading to a rally up to a peak on September 5 before which price fell and began forming the flag square section. This now looks complete and the price is actually in the process of breaking out of the top of the flag – a sign it is about to start rallying higher again.
A break above the 22.07 September 26 high would provide confirmation for the pattern and likely lead to a continuation up to a preliminary target at 22.40, the September 5 peak followed by 22.52 (flat gray dashed line on chart), the actual target calculated using the pattern. The target is calculated by extrapolating the length of the flagpole higher, in the usual method for forecasting these patterns.