AUD/USD set to experience a mild correction lower – DBS Bank

AUD/USD has been drifting lower albeit in a gentle controlled pace. Technically, support at 0.7670 has given way and there is a near-term bearish head-and-shoulders top. This means we should expect a near-term consolidation with a mild negative bias with an attempt to break lower on the year-to-date ranges, according to Benjamin Wong, Strategist at DBS Bank.

AUD/USD is drifting lower within consolidation
“Support rising from 0.7532 has been truncated at a 0.7670 bypass, with AUD mild bearish vibes sporting a bearish head-and-shoulders top pattern. We suspect that with the timelines to see through (i.e. the RBA to tailgate the Fed, and until then remaining dovish), there are two sides of the bread to spread the butter for both bears and bulls.”
“On the weekly Ichimoku chart, the bullish cloud support remains robust with 0.7446 as a key level.”

“In the short term, a dropped-down resistance line from 0.8007 suggests AUD has a bit to do if it tries anything near 0.7813. Hence, at the most, we are into a period of range hemming, but with a near-term downside tilt (the medium term remains questionable on a turning point basis). A 61.8% Fibonacci retracement of the range since last November places a dip towards 0.7378; naturally this needs a break of support layered in the 0.7463- 0.7446 patch.”