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When/Where Should We Sell AUD/USD?

Talking to some old colleagues, I heard that Morgan Stanley is issuing a call to their clients to sell AUD/USD around the current price. They have held a bullish bias towards the USD for a long time and to some extent, I agree with them.

But I don´t think selling right now would be the best thing to do if you want to short this forex pair. Those guys are targeting 0.69, which is reachable if the selling momentum builds up, and placing a stop at 77.60.

The stop loss seems reasonable since it is above the 200 smooth moving average (purple). Again, I would place it a bit higher, probably at 0.7850, because that was the high last year.

Looking at the monthly forex chart, it would have been best to open a long term forex signal about 2 months ago, after the 2 doji candlesticks (which signal a reversal), and when the price was 100 pips higher.

The 20 SMA is providing support ATM

But, the 20 SMA (gray) is providing support right now, so we still have a chance to get a better entry price higher if this MA acts as a road bump and the price jumps 100 pips higher.

That´s what I´m waiting for. I don´t want to enter right here because the price is just above the 20 SMA which is likely to provide some support and most importantly, the risk/reward ratio is not very favorable.

By the way, you can also play a small long from here, with a 50-60 pip target and a stop below the 20 SMA. Hopefully, we see a jump before the big move down.     

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Skerdian Meta
Lead Analyst
Skerdian Meta Lead Analyst. Skerdian is a professional Forex trader and a market analyst. He has been actively engaged in market analysis for the past 11 years. Before becoming our head analyst, Skerdian served as a trader and market analyst in Saxo Bank's local branch, Aksioner. Skerdian specialized in experimenting with developing models and hands-on trading. Skerdian has a masters degree in finance and investment.
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