Flag and Pennant Formation Hint at Downside Risk for Aussie
11 August 2025
In today’s technical analysis, we turn our attention to the Australian dollar against the U.S. dollar, where the market is tightening ahead of a key move. Recent price action shows a bullish correction within a larger downtrend, forming a flag pattern marked with red lines. In technical terms, a flag within a downtrend usually favors a downside breakout.
Adding weight to the bearish bias, the pair remains capped below a significant horizontal resistance at 0.6535, marked with pink. Zooming in, a smaller pennant pattern has formed at the tail end of the flag, highlighted with black lines, signaling indecision before the next impulse.
A decisive H1 close below both the black pennant support and red flag support would trigger a breakout and confirm a sell signal. Alternatively, a move above the pink horizontal resistance with a daily close would flip sentiment to bullish, opening the door for further gains.