AUD/USD walks the line

CMC Markets

Traders with a shorter timeframe are likely watching AUD/USD closely as it nears a line in the sand at 0.7350. The four hour chart tells the story:20150805 audusdThere are two distinct trading zones - above and below 0.7350 - each about one cent wide. The inflection point is clear. While traders should always be aware of the potential for false breaks, penetration or bounces off this line have seen moves to the other end of the zone on a number of occasions.

The strength over the last 24 hours appears related to the lack of "jawboning" in yesterday's statement from the RBA. After the initial spike higher, buying pressure is easing, allowing the RSI to pullback from overbought territory above 80%. This may prompt trader buying if AUD/USD gets closer to 0.7350. A standard stop loss just below is one option, but others may favour a "stop and reverse" order around 0.7338, not only closing any long trade but also selling to open a short position

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