AUD/USD has extended its weakness, breaking below .9332/22 ‒ key price and "neckline" support – to complete a top, notes Credit Suisse.
"We look for further weakness towards the trendline and price support at .9267/58 next, which we would expect to hold at first, ahead of a move towards the more important price and further "neckline" support at .9232/02," CS projects.
"Below here sees the completion of a much larger top, to target the 200-day average at .9186/82 initially," CS argues.
"Immediate resistance shows at .9334, followed by .9356. Above .9373/74 is needed to ease the immediate downside bias," CS adds.
In line with this view, CS entered a short AUD/USD position with a stop at 0.9390, and a target at 0.9215.
In EUR/USD, CS notes that it has fallen to test support next at 1.3474, which marks the 50% retracement of the 2013/14 rise.
"Some initial support has been found here, and we allow for an initial bounce back from here. However, with a larger bearish “wedge” and “head & shoulders” top still in place we look for a break beneath 1.3374 in due course for our target at 1.3248/28 – the 38.2% retracement of the entire 2012/2014 uptrend," CS projects.
"While we would expect this to hold at first, bigger picture, we see scope for 1.3020/15, and ideally 1.2755. Resistance shows at 1.3422/27 initially, then 1.3445/56, above which can ease the immediate downside bias for 1.3486/95," CS adds.
In line with this view, CS maintains a short EUR/USD position with a stop at 1.3553 targeting 1.3250.
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