AUD/USD Price Analysis: Bearish Megaphone shouts a reversal below 0.7150

• A bearish Megaphone formation advocates a bearish reversal.
• A bear cross, represented by the 20- and 50-EMAs adds to the downside filters.
• The RSI (14) needs to violate the 40.00-60.00 range of volatility expansion.

The AUD/USD pair is witnessing a modest downside move after failing to sustain above the critical resistance of 0.7200. The asset has displayed a lackluster performance in the Asian session considering its narrow range auction.

On an hourly scale, the major has formed a Bearish Megaphone that indicates a bearish reversal after the inventory distribution process in which inventory shifts to retail participants from the institutional investors. The upward sloping trendline placed from 0.6872 adjoining May 25 low at 0.7034 will act as a major cushion for the counter.

The 20- and 50-period Exponential Moving Averages (EMAs) have given a bearish crossover at 0.7175, which adds to the downside filters.

Meanwhile, the Relative Strength Index (RSI) (14) is oscillating in the 40.00-60.00 range, which signals a volatility contraction.

A decisive drop below May 31 low at 0.7150 will drag the aussie bulls towards May 24 high at 0.7120, followed by May 25 low at 0.7035.

Alternatively, the greenback bulls could lose their grip if the asset oversteps Monday’s high at 0.7230. The occurrence of the same will drive the asset towards May’s high at 0.7267. A violation of May’s high will unleash the aussie bulls for further upside to April 18 low at 0.7342.

AUD/USD hourly chart