AUD/USD technical analysis: Off lows, but flag breakdown is still valid

• The 4-hour chart shows a bear flag breakdown, a bearish continuation pattern. 
• The pair remains on the defensive with scope for a drop below 0.67. 

AUD/USD has recovered from session lows, but the bulls are not out of the woods yet as a bearish pattern on the 4-hour chart is still valid. 

The currency pair is currently trading at 0.68, representing a 0.10% drop on the day, having hit a low of 0.6786 earlier today. 

However, it is still too early to call a bullish reversal, as the bear flag breakdown on the 4-hour chart confirmed during the US trading hours on Wednesday is still valid. 

The flag breakdown has created room for a drop to 0.6675 (target as per the measured move method).

Supporting the bearish case is the below-50 reading on the 14-day relative strength index (RSI). The MACD histogram is also printing deeper bars below the zero line. 

The immediate outlook would turn bullish if and when the pair finds acceptance above 0.6835, invalidating the bearish lower highs setup. 

4-hour chart

Trend: Bearish

Technical levels