My pick: Buy US dollar-Canadian dollar at Ca$0.9800
Expertise: Technical analysis
Average time frame of trades: 1 to 6 weeks
The market has been under some intense pressure and, after managing to match the lows of last April on the final day of the year, has now extended declines to fresh multi-month lows into the Ca$0.9800’s. But daily studies are starting to look a little stretched, leaving us looking for opportunities to buy rather then selling into the downtrend. Look for a weekly close back above Ca$1.0100 to officially relieve downside pressure and open the door for a bullish reversal.
My pick: Remain short euro-US dollar at $1.3315
Expertise: Global macro
Average time frame of trades: 1 week to 6 months
I sold euro-dollar on 15 December, expecting the euro to fall in 2011 as growth in the eurozone underperformed that of the US – narrowing yield spreads in favor of USD – while the European debt crisis continued. Prices rebounded last week after an unexpectedly hawkish ECB policy statement, but I expect selling to resume as EU finance ministers fail to boost the markets’ confidence in their ability to deal with sovereign threats. I will remain short, targeting $1.2867 with a stop-loss triggered at a daily close above $1.3499.
My pick: Short sterling-Aussie from Au$1.6040. Long on Canadian dollar-yen above ¥84.00
Expertise: Fundamental and technical analysis
Average time frame of trades: 1 to 7 days
Neither of my breakout scenarios from last week (sterling-dollar and Canadian dollar-yen) confirmed themselves as we wait for a meaningful fundamental drive. I’m sticking with the loonie-yen setup; but in the place of the cable, I am looking at a sterling-aussie setup. After a nine-day rally, a correction was formed at a Au$1.6050 confluence. An initial stop and target of 100 points seems reasonable given the higher level of risk.