My pick: Short euro-dollar; Short Australian dollar-dollar
Expertise: Fundamental and Technical Analysis with Risk Management
Average time frame of trades: 1 day to 1 week
The long dollar-Swissie position above SFr0.88 has been slow to gain ground; but clear bearish breaks for euro-dollar below $1.4000 (with a 175 point stop and first target) and Aussie dollar-dollar below $1.0500 (holding a 150 point initial stop and objective) would likely play out quickly. Yet that potential is heavily dependent on risk appetite trends; and that is my reasoning for a conditional and complementary S&P 500 tumble – preferably below 1,300.
My pick: Stay long dollar-yen
Expertise: Global Macro
Average time frame of trades: 1 week to 6 months
I entered long dollar-yen two weeks ago at ¥81.09 as it put in a bullish Piercing Line candlestick pattern and broke above a falling channel top set from April. I am expecting prices to follow Treasury yields higher as QE2 expires against a backdrop of increasing fiscal stress in the US, pressuring borrowing costs higher. The pair met my initial target at ¥81.83, the 38.2 per cent Fibonacci retracement of the 4/6-5/5 drop, and I have moved my stop to breakeven as well as revised the target to ¥82.54, the 50 per cent Fib.
My pick: Buy sterling-Swissie at SFr1.4250
Expertise: Technical Analysis
Average time frame of trades: 6 months
This market trades just off some record lows and, with longer-term studies finally starting to cross up from oversold levels, we like the idea of building a meaningful long position at current levels in anticipation of some significant upside over the coming weeks and months. The added bonus with counter-trending this market is that it also offers a positive carry. Strategy: buy at SFr1.4250 for an open objective; stop at SFr1.3950.