Aussie bulls failed to break the descending trendline TR2 twice now. With bears having had an easier job against weakening bulls, a breakout of the ascending channel starting Mar 26 occurred on May 11.
A test of the short-term low at TR1 followed by a test of the lower channel seems to increase the chances of further downside. However, price action between TR1 and TR2 will determine that following a consolidation breakout.
On the 1-hour AUDUSD chart below, we draw a shorter-term ascending channel for additional guidance.
As seen above, the regression line (median channel line) helped repel bulls, supporting the test of the longer-term lower channel.
That said, TR3 needs to break to offer at least a short-term validation. Then, the shorter-term lower channel should break too in order to validate bears further.
With the 50% Fibonacci of the most recent swings right at 0.6490, the level becomes highly important for the short-term – but not just that.
A break above it could take us towards TR2, whereas, a rejection and a move lower could take us to TR1, where we can expect to receive more bearish evidence.
In case bulls break TR2, we could get a fresh high before reversing back down. The double-divergence signal on the RSI (9), however, spells a different projection.