The break of trend line support on the US$ index had me looking at some of the USD-based exotic pairs and the USD/MXN stood out. There looks to be a large Bear Flag pattern brewing on the weekly chart that could be worth in excess of 25,000 pips. Thus, it might be worth watching the bottom trend line here!
USD/MXN daily: the recent consolidation following the lengthy decline has set up a Bear Flag pattern. The Flag Pole here, that is, the length of the decline is over 25,000 pips:
Bear Flag: technical breakout theory suggest that the potential for any continuation move is equivalent to the length of the Flag Pole. In the case of the USD/MXN this is about 25,000 pips:
USD/MXN weekly: Any Bear Flag breakdown follow-through move of this order of 25,000 pips would bring price action down to the weekly chart’s 61.8% Fib near 16 and this is added for confluence for the Bear Flag pattern:
Summary: Watch the Flag trend lines for any momentum-based breakout move. A target for a bearish breakdown would be the weekly chart’s 61.8% Fib; down near the 16 region.