Keeps the pressure on the pair after China devalue
Traders are keeping the pressure on the AUDUSD as the China devalue is being interpretted as move negative for the fortunes of Australia. The pair is at the lows of the day and looks toward the July lows.
Technically, the sharp fall after the surprise announcement corrected 38.2% and also to the bottom of the broken trend line at the 0.7356 area (see green circle 3). The holding of that area was not good for the dip buyers and they seem to have given up on the upside idea. Also new sellers looking to get in on the trend, were happy to lean against the retracement and trend line (not to mention the 100 hour MA (blue line in the chart above) as well.
The price is currently back in the up and down range that prevailed from July 24 to August 4. The 0.7251-59 area (see yellow area in the chart above) had a number of spread-out swing lows. Yes, there was a break of that floor on July 31, but the subsequent low on August 3 and 4 reestablished the area as a floor.
So I would expect that this area will be the next area for sellers to take a rest and pause. A move below and the low at 0.7233 will become the next focus followed by 0.7190. This is a lower trend line off the weekly chart (see chart below).
Close intraday risk for shorts now comes in at 0.7405 and then the 0.7314 which was the low from August 6th (the bounce off the 200 hour MA - see chart above).
