My pick: Sell sterling-dollar at $1.6210
Expertise: Technical analysis
Average time frame of trades: 3 days to 1 week
The market has recently broken to fresh 2012 highs beyond $1.6000, and this now likely opens additional upside back towards the October 2011 peak by $1.6170. While our core bias remains bearish, we will stand aside and look for opportunities to sell into rallies towards $1.6200. A break and close back below $1.5945 now required to alleviate immediate topside pressures. Sell at $1.6210 for a $1.5800 objective. Stops at $1.6410.
My pick: Short gold
Expertise: Global macro
Average time frame of trades: 1 week to 6 months
With global growth slowing courtesy of a recession in Europe, while the Fed backs off its ultra-dovish posture, inflation is likely to be contained while QE3 prospects fade. Meanwhile, fears of a credit crisis triggered by a Eurozone default have been downgraded after ECB LTRO efforts buffered the banks with close to €1 trillion. This stands to sap store-of-value demand for gold. I will enter short on a weekly close below $1,630 at rising trend line support set from October 2008.
My pick: Short Aussie-yen. Long dollar-yen and euro-Swissie
Expertise: Fundamental and technical analysis
Average time frame of trades: 1 day to 1 week
I backed off risk trading this past week, and the lack of trend proved that a good approach. This week, I will look for sentiment to stir and momentum to gain better traction. A true risk aversion move would work well for an Aussie dollar-yen break below ¥85. I want to pick up a long dollar-yen on such a risk-off tumble – either as momentum flags or hits roughly ¥80.00. As for euro-Swiss franc, I am willing to wait for appreciation as long as the SNB vows to uphold SFr1.20.
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