Analyst picks for Tuesday 23 October 2012


My pick: Long euro-dollar and New Zealand dollar-dollar
Expertise: Fundamental and technical analysis
Average time frame of trades: A few hours to a few days

Two weeks ago I explained that I had taken a new long New Zealand dollar-dollar position at $0.8175. Alongside stimulus measures expected from China as its new leadership comes into play, and expectations of a positive market reaction from a potential Spanish bailout request, I have been gearing up for a dollar sell off. Although the most recent Eurozone summit did not produce a Spanish bailout request, it’s pretty clear that it will come very soon. I remain bullish on risk.


My pick: Stay long dollar-yen
Expertise: Global macro
Average time frame of trades: 1 week to 6 months

I entered long dollar-yen at ¥78.67 last week, as prices corrected lower after taking out major technical resistance marked by the tops of a triangle consolidation chart pattern. The pair has since moved aggressively higher, as disappointing economic data feeds expectations that the Bank of Japan will expand stimulus measures at this month’s policy meeting. Prices are now testing above my initial target at ¥79.53 and I will continue to hold long, aiming for ¥80.39.


My pick: Short euro-dollar, long sterling-yen, stay long dollar-yen
Expertise: Fundamental and technical analysis
Average time frame of trades: 1 day to 1 week

Only one of my three setups from last week triggered (long dollar-yen above ¥79) and it doesn’t surprise me. There is a lot of potential in these markets, but we need a strong drive to set this potential off. Meanwhile, careful range trades are best. I have another set of high potential, but volatility-dependent setups going forward: short euro-dollar below $1.2850 support, and long sterling-yen breaking its long-term wedge top at ¥128.50.