Bullish flag on the AUD/USD

A bullish flag is a continuation chart formation where the price after having a bullish trend comes into an area of consolidation and forms a channel with a small inclination to the downside. It is called a bullish flag, because the price tends to continue going higher after it breaks out of the consolidation.

On the AUD/USD 4 hour chart we can see that the price has formed a bullish flag just below its 200 period exponential moving average (blue line). From this point on, if the price continues going higher it may find some resistance around that 200 period exponential moving average. But the price may also break to the downside and if it does so, the area of the 0.6936 level could act as support. The stochastics are pointing down due to the small inclination to the downside that the channel forming the flag has, but it could also change to the upside.