Analyst picks for 15 January 2013


My pick: Keep an eye on Japanese yen pairs
Expertise: Fundamental and technical analysis
Average time frame of trades: A few hours to a few days

I am focused on yen pairs. Traders have already priced in ultra-dovish policies from the Bank of Japan (BoJ), and there is an argument that the yen could now be oversold. The dollar-yen weekly relative strength index is the highest since December 2005, and net non-commercial futures positioning is the most bearish since July 2007. Therefore, seeing a top in the Aussie dollar-yen, euro-yen and dollar-yen after the BoJ’s meeting would not be surprising; the conditions are ripe for a reversal.


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

I expect the Swedish Riksbank to keep rates on hold in 2013, and the European Central Bank to begin easing. Therefore, in December I went short on euro-krona at Kr8.7315, as a bearish evening star candle chart pattern at a key Fibonacci retracement level had formed. A shooting star candlestick chart pattern is also developing at Kr8.6284, hinting at further weakness ahead. I’ll wait for a daily close below Kr8.5898 before I add to the position, with a target price of Kr8.4994.


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

Although volatility swelled last week, it wasn’t a consistent risk-based move. My potential trades in sterling-dollar below $1.60, and euro-yen below ¥113.25 were not triggered. But the long euro-sterling position from £0.8165 is doing well, and it may be worth taking some profits on that trade. Moving forward, there is a high chance of a risk-based correction. On that view, euro-dollar could retrace its rally below $1.3310, and sterling-Aussie dollar could climb from Au$1.5275.