Red lines- bearish channel
Blue lines- bearish flag
AUDUSD has broken down and out of the bearish flag pattern providing a new bearish signal. Price continues making lower lows and lower highs as expected. In our previous analysis we warned bulls that the bearish flag formation combined with the absence of a bullish RSI divergence in the 4 hour chart suggest that price remains vulnerable to more downside. Resistance is at the upper channel boundary 0.6495. Price is inside the bearish red channel. Downside target is at 0.62 where we find the lower channel boundary. Bears remain in control of the trend. The RSI has provided us with the first bullish divergence in the Daily chart. This is only an indication of weakening down trend. This is not a reversal signal. A break out of the bearish channel would be a reversal signal.
