Analyst picks for 3 January 2012

My pick: Looking to buy euro-Australian dollar
Expertise: Technical analysis
Average time frame of trades: Multiweek

This market is trading near 20-year lows and is very close to retesting the record Au$1.2500 lows from 1989. Short-term, medium-term and longer-term studies are all looking stretched and we will look for an opportunity to buy once the Au$1.2500 level is taken out, in anticipation of a major correction and eventual bullish trend reversal. Only a weekly close below Au$1.2300 would give reason for concern, while back above Au$1.3000 confirms and should accelerate gains.

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

I entered short at $1.3526 on 9 November expecting the Eurozone debt crisis to continue to spread. I moved my stop to breakeven after the pair hit my initial objective at $1.3141, aiming for the next target at $1.2872. Prices are now showing a bullish hammer candlestick above support, at the bottom of a falling channel established in November, hinting a near-term upswing may be ahead. I’ll use this as an opportunity to add to my short position. Initial resistance is seen in the $1.3144-$1.3221 region.

My pick: Buy dollar-yen declines above ¥76.50
Expertise: System trading
Average time frame of trades: 2 to 10 weeks

FXCM’s Speculative Sentiment Index data shows that the majority of retail traders have attempted to pick a dollar-yen bottom, since the pair traded at the ¥90 mark and failed. So what makes this trade idea any better? Put simply, dollar-yen hasn’t made a fresh low in two months, and having a central bank on your side doesn’t hurt either. I like buying as long as we respect the trend of higher lows, and I target a fresh test of previous peaks at ¥79.50.