Breaking News: GBP/MXN Correction After Bullish Pennant Breakout – What’s Next?
In recent trading, GBP/MXN has experienced a correction after breaking out of a bullish Pennant pattern. This correction has brought into question the validity of the pattern, but there is still potential for the pair to reach its target.
GBP/MXN formed the bullish Pennant continuation pattern between August 28 and September 4, while moving within a rising channel. The breakout from the pattern was expected to lead to an upside target of 27.11, based on the 0.618 ratio of the length of the preceding steep rise.
However, the pair failed to reach this target and has since fallen back to trade in the lower 26.00s. The current situation is critical, as further weakness could invalidate the Pennant pattern, while a recovery could still see GBP/MXN reaching its target.
The Relative Strength Index (RSI) indicator has shown strong bearish momentum during the recent sell-off, indicating a potential downside. Despite this, the overall trend for GBP/MXN remains bullish in the short, medium, and long-term, suggesting a higher probability of further upside movement.
For traders and investors, a close below 25.90 would likely invalidate the Pennant pattern, while a recovery above 26.56 would confirm a continuation of the upward trend towards the original target of 27.11.
In conclusion, GBP/MXN is currently at a crucial point, with both bullish and bearish factors at play. Traders should closely monitor price movements and key levels to determine the next potential direction for this currency pair.