My pick: Short euro-dollar, short euro-Canadian dollar, long dollar-yen
Expertise: Fundamental and Technical Analysis with Risk Management
Average time frame of trades: 1 day to 1 week
The Kiwi dollar-dollar’s bearish reversal I was looking for didn’t play out from last week as fundamental support in the form of risk appetite didn’t take hold. The market is still exposed to false breaks; but I’ll let my dollar-yen long from ¥82.50 play out as planned. Also, I am still heavily skeptical; and so a short euro-dollar on a trend reversal (below $1.43) and euro-Canadian dollar bearish break (below ¥1.3675) are fundamentally sound and technically appealing.
My pick: Long dollar-yen
Expertise: Global Macro
Average time frame of trades: 1 week to 6 months
Dollar-yen has taken out support at ¥82.01 – the 38.2 per cent Fibonacci retracement of the rally from the 17 March low – exposing the 50 per cent level at ¥80.93. I will treat the pullback as a buying opportunity, expecting dollar-yen to turn higher along with Treasury yields over the months ahead as fiscal stress in the US, along with the beginning of unwinding of QE2, pressure borrowing costs higher. An entry point is not yet apparent, but a break higher from the falling channel set from April’s high would be compelling.
My pick: Sell recommendation in Australian dollar-dollar
Expertise: Technical Analysis
Average time frame of trades: 6 months
The uptrend remains firmly intact, but we continue to see the greater risk over the short-term for corrective reversal, with daily studies overbought and the market trading by 30-year highs. Our preferred strategy is to look to sell on rallies towards $1.0750, or on a daily close back below $1.0675. Once the trade is triggered on either end, using tight risk management is essential. Look to place a stop-loss only on a daily close above the latest yearly high once triggered and expect sizable downside follow-through.