AUD/USD is within a medium-term upswing as enjoys a bullish undercurrent – DBS Bank

AUD/USD has retraced some of its gains from its recent short squeeze rally that peaked at 0.7661 in early April. In the view of Benjamin Wong, Strategists at DBS Bank, AUD’s ongoing downside correction is unlikely to trend. Rather, it is part of a broadening and “noisy” right hand shoulder of a long-term bullish inverse-head-and-shoulders pattern.

0.7233 should remain as the key support pivot

“AUD is enjoying a bullish undercurrent as it works out the right-hand shoulder of a brewing bullish inverse-head-and-shoulders pattern. Very often, when such shoulders are formed, one should expect range choppiness. For now, the price channel has clearly contained the recent short-covering charge at 0.7661. In a nutshell, AUD certainly is within a medium-term upswing.”

“Aussie remains poised to challenge higher levels. If AUD keeps above its 200 weeks moving average at 0.7152, buying dips within the ‘noisy’ right hand shoulder of a brewing bullish inverse-head-and-shoulders is fancied.” 

“On its shorter time frame, AUD is likely still correcting the rally, where there are price pegs to consider – the Fibonacci retracement at 0.7233 and minor trend support around 0.7337.”