The Australian dollar could not maintain the momentum and surrendered to the strength of the greenback.
What’s next? The team at Morgan Stanley suggests going short on the Aussie,and explains with 3 charts:
Here is their view, courtesy of eFXnews:
Morgan Stanley picks AUD/USD as its technical FX chart of the week where MS remains bearish and looks for new selling opportunities. MS provides some important levels for this potential trade where traders should consider entering this trade and placing their stops and targets accordingly.
On the long term AUD/USD Chart:
“We are bearish on AUDUSD over the long term, targeting 0.68 for year end. AUD is currently in a 5 th wave part of a larger [3]rd wave. The substructure of the 5 th wave is incomplete as shown below, suggesting there is further downside for the currency pair,†MS clarifies.
On the 2-year AUD/USD Chart:
“AUDUSD positioning is currently light, with many of the previous shorts being taken off, opening room for potential downside when positions come back. We believe AUDUSD is currently in the (5)th downward leg of the larger 5 th wave structure. We suggest selling AUDUSD and put stops at 0.82, just above the (4) th wave high as a move above here suggests that wave is incomplete,†MS advises.
On the 90-day AUD/USD Chart
“While we are currently bearish, we note that when the longer term [3]rd wave completes there will be a retracement of this wave, after which we would sell again. In the short term, AUDUSD broke out of the bottom end of the recent channel at 0.7980, falling sharply after. The next level we watch for is the 61.8% retracement at 0.7789,†MS projects.
MS maintains a short AUD/USD position in its strategic portfolio from 0.8050 targeting a move towards 0.75.
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