My pick: Short euro-dollar $1.3400 and sterling-dollar below $1.5300
Expertise: Fundamental analysis with risk management
Average time frame of trades: 1 day to 1 week

This past week the markets delivered a major shock to risk trends. The opportunities this development produced were substantial. In this move, my Aussie-yen and Loonie-yen setups – short below ¥77.50 and ¥76.50 respectively – played out quickly. Going forward, the larger bear trend is still in place, but we are currently taking a breather. I’ll wait until risk aversion reengages with a euro-dollar drop below $1.3400 and sterling-dollar below $1.53 (with 200 point stops and initial targets for both).


My pick: Short Australian dollar-dollar at $1.0000
Expertise: Technical analysis
Average time frame of trades: 1 day to 1 week

The latest sharp pullback below $0.9925 opens a fresh downside extension exposing $0.9000. It officially confirms a major lower top by $1.0765. However, with short-term technical studies looking stretched, I wouldn’t rule out the possibility for some form of corrective relief back above parity, before the market once again resumes its downward trajectory. Nevertheless, inter-day rallies should be well capped below parity on a daily close. Sell at $1.0000 for a $0.91000 objective, with a stop at $1.0450.


My pick: Stay short euro-dollar (stop-loss at the breakeven level)
Expertise: Global macro
Average time frame of trades: 1 week to 6 months

I sold euro-dollar at $1.4328 on 29 July expecting the deepening debt crisis to weigh on the euro, while anaemic global recovery boosts safe-haven demand for the dollar. The pair dropped to a 7-month low last week, but technical positioning now suggests a corrective bounce is ahead as relative strength studies show signs of positive divergence with price action. I will remain short and look for the forthcoming upswing as an opportunity to add to my position.