DailyFX: Analyst picks

CURRENCY STRATEGIST
CHRIS VECCHIO

My pick: Stay long sterling-yen
Expertise: Fundamental and technical analysis
Average time frame of trades: A few hours to a few weeks

The sterling-yen long from net ¥160.80, after upside the past few weeks, was knocked from its original entry on 5 December. The stop was held at ¥165.80 to lock in 5 per cent, at the daily 8-EMA at the time. On Friday, I took a half-sized long re-entry on sterling-yen at ¥167.05. As long as momentum remains bullish, sterling-yen remains a buy-on-dip. There haven’t been two consecutive daily closes below the daily 8-EMA since 1 and 4 November. Once this behaviour changes, only then will we reconsider the sterling-yen bullish bias.

STRATEGIST
ILYA SPIVAK

My pick: Short euro-dollar (pending)
Expertise: Global macro
Average time frame of trades: 1 to 6 months

Looking past near-term volatility triggered by conflicting efforts from central bank officials, the trajectory of US Federal Reserve policy (namely, looking to taper QE asset purchases at some point in 2014) contrasts with that of the European Central Bank. A shallow rebound from November lows, mounted after prices were sent downward having tested the boundaries of the five year down-trend, looks to be running out of steam. I will look for technical confirmation on a weekly close below $1.3652 to enter short, targeting $1.33 initially.

CHIEF STRATEGIST
JOHN KICKLIGHTER

My pick: Long Aussie-dollar, short sterling-dollar and euro-yen
Expertise: Fundamental and technical analysis
Average time frame of trades: 1 day to 1 week

Last week was a mixed bag of volatility and divergent fundamental themes. As we head into the holiday period, those conditions are likely to intensify. As the amplitude on risk trends settles, a rebound from Aussie dollar-dollar from depressed levels can break a seven-week bear channel above $1.9150. Sterling-dollar is exposed to an overextended yield outlook and would be good below $1.6250. Euro-yen is a year-end flow, overbought candidate with a confirmation below ¥140 and ¥138.50.