AUD/USD: The risk of a correction grows sharply – Credit Suisse

The AUD/USD pair remains in its high level range above key supports at 0.7532/00 for now but the risk of a corrective setback is growing, according to the Credit Suisse analyst team.

Key quotes

"AUD/USD maintains its sharp rejection from key resistance and our first core upside objective at the 38.2% retracement of the entire 2011/2020 fall at 0.7625/40. This rejection reinforced the potential for a phase of consolidation to help the market to unwind it s previously overbought condition and importantly, the risk of a deeper correction setback is also growing.” 

“Support stays at the 13-day exponential average and psychological barrier at 0.7532/00, which needs to hold on a closing basis to avoid such a setback. Assuming this is the case, the risk will stay seen higher post further sideways ranging and with a large ‘head and shoulders’ base still in place, a clear break of 0.7632/40 is looked for post this phase, with next initial resistance at 0.7673/77.” 

“A close below 0.7529/00 would instead confirm a deeper correction lower, with the next supports below here seen at the recent spike low at 0.7462, then 0.7392/73.”