My pick: Sell euro-dollar against $1.4340
Expertise: System Trading
Average time frame of trades: 2 days to 10 weeks
I remain short the euro against the US dollar from last week, as I think we have recently seen an important top in the euro-dollar. FXCM’s proprietary Speculative Sentiment Index (SSI) data has remained short on the euro ever since January, but a more recent flip to net-long now gives contrarians the signal to sell. This important shift in sentiment leaves my first short-term target at the $1.3900 mark.
My pick: Stay long dollar-yen
Expertise: Global Macro
Average time frame of trades: 1 week to 6 months
Last week I entered long dollar-yen at ¥81.09 as it followed up a bullish Piercing Line candlestick pattern with a through falling channel resistance established from April’s swing top. I’m expecting prices to rise along with US Treasury yields as the Federal Reserve allows QE2 to expire in June against a backdrop of increasing fiscal stress, pressuring borrowing costs higher. I am initially targeting ¥81.83, the 38.2 per cent retracement of the drop through 5 May. A stop-loss will be activated on a daily close below ¥80.74.
My pick: Sell euro-dollar
Expertise: Technical Analysis
Average time frame of trades: 1 week to 6 weeks
The market has come off some 10-big figures in a matter of days to take out some critical support and signal a shift in the structure. However, a necessary corrective bounce is underway, and selling into rallies is the preferred strategy. The 50-Day SMA comes in by $1.4315 and we like the idea of taking a shot and establishing a fresh short position on a move to $1.4315 today in anticipation of the next interday lower top. Sell at $1.4315, with an objective for $1.3815 and stop at $1.4565.