AUD/USD to suffer a deep correction lower towards the 0.7240 zone – Credit Suisse

AUD/USD has fallen sharply, removing crucial support at 0.7564/57 to confirm a large “head and shoulders” top, to reinforce the view of the Credit Suisse analyst team of a much deeper correction lower. 

AUD/USD beneath 0.7564/57 confirms the “head and shoulders” top 

“AUD/USD has resumed its downmove overnight, breaking beneath the crucial cluster of supports at 0.7564/57 – the December and February lows – confirming the large ‘head and shoulders’ top originally established late March. With daily momentum also pointing at further weakness we look for further downside to unfold, reinforcing the view for a much deeper correction lower.” 

“Support is initially seen at 0.7517, then 0.7500/7499 – the 50% retracement of the surge from November 2020. Beneath here would expose the late December low at 0.7462, removal of which should see a test of the 200-day average, currently at 0.7389. Although we would look for a first attempt to hold here, we would like to note that the ‘measured objective’ seen lower at 0.7243/40.” 

“Near-term resistance moves to 0.7563, then 0.7574, with the immediate risk seen lower whilst below 0.7601. Above can see a deeper recovery to 0.7637/41 next, with fresh sellers expected here. Beyond here though could expose the late March high and ‘neckline’ to the top at 0.7664/69.”