AUD/USD Price Analysis: Range play continues, forms a symmetrical triangle ahead of Fed

• AUD/USD remained confined in a narrow trading band through the early European session.
• A symmetrical triangle formation warrants some caution before placing fresh directional bets.
• The set-up favours bearish traders and supports prospects for a retest of monthly swing lows.

The AUD/USD pair lacked any firm directional bias and continued with its two-way price moves through the early European session on Wednesday. The pair remained confined in a narrow trading band held since the beginning of this week and was last seen hovering around the 0.7740-35 region.

The rangebound trading between two converging trend-lines constitutes the formation of a symmetrical triangle pattern on hourly charts. This is often categorized as a continuation pattern, though there are instances when a symmetrical triangle marks an important trend reversal. That said, the next leg of a directional move can only be determined after a valid breakout.

Meanwhile, technical indicators on hourly/daily charts have been drifting lower but are yet to confirm a bearish bias. This further makes it prudent to wait for a sustained move in either direction before placing any aggressive bets. The 0.7700 round-figure mark has been acting as strong support, which, in turn, should now act as a key pivotal point for short-term traders.

A convincing break below the mentioned level will be seen as a fresh trigger for bearish traders and turn the AUD/USD pair vulnerable. Subsequent downfall has the potential to drag the major to the 0.7655-50 intermediate support en-route monthly swing lows near the 0.7620 region. Some follow-through selling below the 0.7600 mark will set the stage for additional weakness.

On the flip side, any meaningful move up beyond the triangle hurdle, around the 0.7745-50 region is likely to confront stiff resistance near the 0.7800 round-figure mark. That said, a sustained strength beyond will negate any near-term bearish bias and lift the AUD/USD pair further towards the next major resistance, around the 0.7835-40 heavy supply zone tested earlier this March.

AUD/USD 4-hourly chart

Technical levels to watch