My pick: Long euro-yen at ¥101.70
Expertise: Technical analysis
Average time frame of trades: Multiweek
Euro-yen is trading near multi-year lows and just off the psychological barrier of ¥100.00. The recent failure to break below this and a subsequent minor bounce suggests we could be seeing the formation of a material base. Setbacks towards ¥100.00 were already well-defended in October, and another bounce in December could set up a major double bottom formation, exposing ¥120.00 over the coming months. Yield differentials are also on our side. Exit only on a weekly close below ¥99.00.
My pick: Remain short euro-dollar
Expertise: Global macro
Average time frame of trades: 1 week to 6 months
I entered short at $1.3526 on 9 November expecting the Eurozone debt crisis to continue to spread. I moved my stop to breakeven after the pair hit my initial objective at $1.3141 – aiming for the next target at $1.2872. A near-term corrective bounce on the back of year-end profit-taking appears likely, with prices showing a bullish “three inside up” candlestick pattern. I will treat the recovery as an opportunity to add to my short position. Initial resistance is seen in the $1.3144-$1.3221 region.
My pick: Buy dollar-yen declines above ¥76.50
Expertise: System trading
Average time frame of trades: 2 to 10 weeks
FXCM’s Speculative Sentiment Index data shows that the majority of retail traders have attempted to pick a dollar-yen bottom, since the pair traded at the ¥90 mark and failed. So what makes this trade idea any better? Put simply, dollar-yen hasn’t made a fresh low in two months, and having a central bank on your side doesn’t hurt either. I like buying as long as we respect the trend of higher lows, and I target a fresh test of previous peaks at ¥79.50.