My pick: Long euro-Swiss franc at SFr1.2530
Expertise: Technical analysis
Average time frame of trades: 1 to 6 weeks
The market has come back under pressure since breaking back below SFr1.3000, with the latest declines resulting in a drop to record lows. But given the intensity of the latest drop, we still hold a longer-term outlook, with daily studies showing that it is oversold and that any additional declines below SFr1.2400 are not expected to be sustained. The market looks to be carving an inverse head and shoulders base that should accelerate towards SFr1.3000 on a break back above SFr1.2730 in the future.
My pick: Short sterling-dollar below $1.5350, long loonie-yen above ¥84.00
Expertise: Fundamental and technical analysis with risk management
Average time frame of trades: 1 day-1 week
The long sterling-dollar setup from last week played out well; and dollar-loonie has expired as a reasonable set-up. This week, I’m waiting for the tense opportunity for sterling-dollar to break from its burdensome $1.5650 to $1.5350 range. I would prefer a bearish move and would work with a 125 point stop and first target. A loonie-yen break above ¥84 is more speculative and would work well with a 100 point stop and first target.
My pick: Remain short euro-dollar
Expertise: Global macro
Average time frame of trades: 1 week-6 months
I sold euro-dollar at $1.3315 on 15 December, expecting the euro to slump in 2011 as economic growth in the Eurozone continued to underperform the US. This was due to narrowing US yield spreads in favour of the dollar opposed to the potential of further crises in the Eurozone. Last week, prices cleared a rising trend line support that has been set since August. This met my objective of $1.2969. I have now trailed my stop-loss to break-even and revised the soft target lower to $1.2763.