DailyFX: Analyst picks


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

I remain long on sterling-yen from ¥167.05, despite the brief pullback from yearly highs just above ¥170.00. As long as momentum remains bullish, sterling-yen remains a buy on dips. There hasn’t been two consecutive daily closes below the daily 8-exponential moving average since 1 and 4 November. Once this behaviour changes, only then will we reconsider the sterling-yen bullish bias. The Federal Reserve’s meeting tomorrow could dramatically shift the landscape; my stop is at entry (¥167.05) to eliminate any risk.


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

Looking past near-term volatility amid QE “taper” timing speculation, the trajectory of Fed policy – namely, looking to reduce stimulus in 2014 – stands in stark contrast to that of the European Central Bank. That makes for a decidedly bearish euro-dollar outlook. I entered short at $1.3757 last week, as prices began to show technical signs of reversal on testing the outer boundaries of the down trend from April 2008. I am initially targeting $1.3148. A stop-loss will be triggered on a daily close above $1.3810.


My pick: Short Aussie-dollar, sterling-dollar, long sterling-Kiwi
Expertise: Fundamental and technical analysis
Average time frame of trades: 1 day to 1 week

This week will be a complicated one, as we have heavy event risk – including the Fed – but liquidity is dropping fast for the holiday. That can ramp or kill volatility, but it will most certainly prevent big trends. As such, my view is short-term. Given the depth of stops below $0.8850 on Australian dollar-dollar, a risk-off spark would ignite. Sterling-dollar below $1.6250 would be a return to range. For sterling-New Zealand dollar, it is a lesser risk play on prevailing trends.