The Flag chart pattern began forming after the initial strong drop that began the trading week, with the mild bounce from the $3.80 swing low establishing a sideways range. This places the price near contract lows and may be setting up for a meaningful directional breakout in the near future.

Support provided by the flag has risen up to the $3.85 level which, if breached, would suggest this is a continuation pattern with significant downside remaining to complete the move. Resistance at the $3.90 level has so far capped the bounce from the lows, and a move above that level would trigger an upside breakout. A rally out of the flag would place the market on track for a complete retracement of Monday's drop, with a likely move back above the $4.00 level from there.
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