AUDUSD holds key support ahead of FOMC: what buyers and sellers need to see

The AUDUSD is down this week after falling beneath a rising trendline, but sellers have been unable to push the move through a critical support zone so far.

As the market awaits the FOMC rate decision, the pair sits between support and resistance. While the Fed's move is likely to drive the next major direction, these technical levels offer traders a clear guide to gauge whether buyers or sellers are gaining the upper hand.

Sellers test support but fail to hold below

The decline brought the AUDUSD into a swing area between 0.7117 and 0.71324. The four-hour 200-bar moving average also resides there, adding extra significance to the zone.

The price briefly dipped beneath the swing area and the moving average, but selling momentum faded, and the price has since recovered into the support zone.

This failure to sustain a break is significant. Sellers had their chance, but they need a close below 0.7117 and the four-hour 200-bar moving average—followed by continued selling—to strengthen the bearish case.

If that occurs, the downside levels would be:

• 0.70950, the 38.2% retracement of the rise from the late-June low
• 0.70789, the 100-day moving average

These would then become the next battleground for buyers and sellers.

What buyers need to do

Defending the current support zone gives buyers a foundation, but there is more work ahead.

The initial upside target is 0.71492. That level supported the pair last week, then acted as resistance early this week before the price turned lower.

A climb above 0.71492, followed by sustained buying, would give buyers more control. The next targets would then be the four-hour 100-bar moving average and the underside of the broken trendline.

Trading education: a break is not enough

This setup illustrates the key difference between breaking a level and confirming the break.

The AUDUSD moved below the swing area and the four-hour 200-bar moving average but could not stay down there. The lack of follow-through weakened the bearish signal.

In my book Attacking Currency Trends, I stress that moving through a level is only the first step. Holding through it is what provides traders with more confidence that control has shifted, and it also offers a clear level to manage risk.

The roadmap ahead of the FOMC

The technical picture is clear:

• Above 0.71492, buyers start to take more control, with eyes on the four-hour 100-bar moving average and the broken trendline.
• Between 0.7117 and 0.71492, the pair stays in a decision zone where neither side has confirmed full control.
• Below 0.7117, with the price holding under it, sellers gain more control, bringing 0.70950 and 0.70789 into view.

The FOMC decision could act as the trigger, but the price action at these levels will offer the next clue.