Analyst picks for 28 August 2012

CURRENCY STRATEGIST
CHRIS VECCHIO

My pick: Short Aussie-dollar
Expertise: Fundamental and technical analysis
Average time frame of trades: A few hours to a few days

Despite the rally that came after minutes of the Federal Reserve’s latest meeting were released, the Aussie-dollar has broken down to fresh lows for the month of August. Given this intra-month reversal, it is likely that we will see further losses going into the last week of the month. The downtrend that began in the early part of August still remains intact. A daily close below $1.0400 suggests further losses towards the $1.0310 mark.

STRATEGIST
ILYA SPIVAK

My pick: Stay short Aussie-Canadian dollar
Expertise: Global macro
Average time frame of trades: 1 week to 6 months

I sold Aussie-Canadian dollar at Ca$1.0441 to gain exposure to expectations of slower Chinese growth against accelerated US economic expansion. The trade was triggered as prices broke support at the bottom of a rising wedge chart pattern, after completing a bearish evening star candlestick. The initial target is Ca$1.0281. Prices are making downside progress and I will continue to hold the trade. A stop-loss will be activated on a daily close above Ca$1.0598.

CHIEF STRATEGIST
JOHN KICKLIGHTER

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

Volatility increased last week and some clean ranges (like sterling-dollar) came under stress. There is still a lull before heavy event risk in the first half of September (Fed, ECB, EU summit), so volatility is warping technical levels, and trends are struggling to solidify. For a risk-detached range, I like the dollar-yen wedge (long bias). For a break, I like an Aussie-dollar channel break at $1.0400. And, for intervention, I like euro-Swiss franc long from SFr1.2060.