- AUD / USD remains trapped within a tight range at the start of the European session on Wednesday.
- A symmetrical triangle pattern warrants some caution before opening new directional positions.
- The technical setup favors the bears and supports the prospects for a retest of the monthly lows.
The AUD / USD pair lacks a firm directional bias and continues its two-way moves at the start of the European session on Wednesday. The pair remains trapped within a tight range that has held since the beginning of this week. At the time of writing, the pair is trading around the e 0.7735 level.
Movement in range between two converging trend lines constitutes the formation of a symmetrical triangle pattern on short-term charts. This is often classified as a continuation pattern, although there are cases where a symmetrical triangle marks a major change in trend. That said, the next directional move can only be determined after a valid breakout.
Meanwhile, the technical indicators on the hourly and daily charts have been declining but have yet to confirm a bearish bias. This makes it prudent to wait for a sustained move in either direction before opening aggressive positions. The round 0.7700 level has been acting as strong support which, in turn, should now act as a key point for short-term investors.
A convincing break below the mentioned level will be seen as a new trigger for the bears and will make the AUD / USD pair vulnerable. The subsequent decline has the potential to drag the pair towards the intermediate support at 0.7655-50, before targeting monthly lows near the 0.7620 region. Some subsequent selling below the 0.7600 level will set the stage for further weakness.
On the other hand, any significant move to the upside above the triangle hurdle, around the 0.7745-50 region, is likely to face strong resistance near the round 0.7800 level. That said, a sustained force above that level will negate any short-term bearish bias and further lift the AUD / USD pair towards the next major resistance, around the 0.7835-40 zone tested in early March.
AU / USD 4 hour chart
AUD / USD technical levels
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