Analyst picks for 2 January 2013

QUANTITATIVE STRATEGIST
DAVID RODRIGUEZ

My pick: Short Aussie dollar-dollar against December high
Expertise: System trading
Average time frame of trades: 2 days to 10 weeks

Important evidence of a sentiment extreme suggests that the Australian dollar could continue lower in the foreseeable future. The Commodity Futures Trading Commission’s commitment of traders report recently showed that speculative futures traders were the most net-long on Aussie-dollar on record. Sentiment extremes are only clear in hindsight, but we’ve most recently seen a large reversal in retail trader sentiment. I’d like to get short Aussie-dollar against the December high at $1.0585, with initial targets at $1.0300.

STRATEGIST
ILYA SPIVAK

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

I sold euro-Swedish krona at SEK 8.7315 on 19 December, after prices completed a bearish evening star candlestick pattern at channel and 61.8 per cent Fibonacci retracement resistance. I am expecting the Risksbank to switch to a neutral policy stance after December’s rate cut, while the European Central Bank begins easing in 2013. A break below support at SEK 8.5511 exposes downside targets at SEK 8.4047 and SEK 8.1682. A stop-loss will be triggered on a daily close above SEK 8.7941.

CHIEF STRATEGIST
JOHN KICKLIGHTER

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

The short risk I took previously started to work out, but liquidity and carry would not offer strong incentive to hold. Through the warped trading conditions moving forward, I am turning away from overt risk. I like the long-term dollar-yen long theme from back at ¥82.50 and ¥80.50. A long-term 50 per cent Fibonacci break on euro-sterling above £0.8165 doesn’t need risk trends. And a euro-Kiwi dollar range play below NZ$1.5800 is a passive set-up with carry.