Analyst picks for 9 July 2012


My pick: Short Aussie-dollar, long dollar-yen, short euro-yen

Expertise: Fundamental and technical analysis

Average time frame of trades: A few hours to a few days

Our bearish risk case continues to build, and we now have some compelling technical cases for a further flight to safety ahead. Mainly, we look at euro-yen and euro-dollar. Both pairs have set in motion bearish patterns that look some 2 per cent lower each. The euro-yen is of greater interest now that it is working on a head and shoulders pattern below ¥98.60. We are selling rallies towards this level, and looking for the yearly low at ¥95.57.


My pick: Stay long dollar-yen

Expertise: Global macro

Average time frame of trades: 1 week to 6 months

I bought dollar-yen at ¥78.96, expecting advances after the Federal Open Market Committee opted not to launch QE3 in June. The pair has already hit its initial target at ¥79.69 and I am now aiming for ¥80.38 as the next significant level. Prices are consolidating above range support at ¥79.44, but a bullish engulfing candlestick pattern, completed on 29 June, remains valid and hints at an upswing ahead. A stop-loss will be triggered on a daily close below the break-even level of ¥78.96.


My pick: Short Kiwi-Loonie and sterling-dollar, long euro-Swissie

Expertise: Fundamental and technical analysis

Average time frame of trades: 1 day to 1 week

After the European Central Bank’s decision to avoid further stimulus, it is dawning on markets that outside support for exceptionally weak expectations of return is drying up. We may finally see risk trends drop to meet fundamentals. For a risk view, I like Kiwi-Loonie below C$0.81. Replacing my Loonie-Swissie long that paid off last week, a sterling-dollar short below $1.525 isn’t as risk sensitive as you’d think. And of course, I’m sticking with euro-Swissie awaiting the Swiss National Bank.