Daily moves of the Australian market are becoming more difficult to predict. Yesterday, the Australia 200 index showed surprising strength. Today, despite positive leads from energy and metal markets and only mild falls in the US, the market is down. Thankfully, the market has drawn two "lines in the sand" to guide traders and investors.

Here's the view:

Australia 200 - daily

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In the short term at least, this is a sideways market. Unusually for a range trading index, volatility (90 day historic and implied) are picking up. This could be pointing to an imminent large move, although volatility indicators do not indicate the direction.

Investors may take less comfort from these breaches, particularly as the market has nullified many of the breaks within 24 hours. Today's action is illustrative. Sectors leading the market lower include healthcare, financials and consumer discretionary - the recent strong performers. The question for today is whether investors are taking money off the table through outright selling or re-balancing by selling first, only to buy growth related stocks later. We'll know in 24 hours or so.

However, the clearly defined support and resistance are particularly useful to traders. Breaks outside the range tend to produce significant intra-day moves - yesterday's breach of resistance at 5,220 sparked a 30 point rally, before falling back into the trading range.

Traders today are likely watching the support at 5,165 very closely. A fall through here could see selling accelerate. Given the number of false breaks, I'm traeting this as a short term opportunity only, using a tight stop and a modest target:

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