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Forex Analyst Picks & Strategies for

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John Kicklighter RSS Twitter

Chief Currency Strategist
John Kicklighter

My Picks: Long: USDCHF, AUDNZD; Short: EURAUD; Watching; GBPUSD, NZDUSD, EURUSD
Expertise: Fundamentals and Technicals
Average Time Frame of Trades: 1 Day to 2 Weeks

There are some pairs that are facing major breakouts due to technical conditions, fundamental circumstances and even a mixture of both. There is opportunity to be found in this picture - but we shouldn't let a glimmer of volatility lead us to act on scenarios that aren't there.

While there is certainly break out opportunity across a number of the majors and crosses through the near future; most of these setups are moves that lack for follow through or are unlikely to trigger until a sizable shove that can feel follow through is realized.

Perhaps the most imminent breakout candidate out there is GBPUSD. The pair is facing a wedge that is less than 70 pips (April's rising trendline confronting the range high at 1.6800/35) while its average daily trading range is greater than that. A breakout here is a necessity, but without a material shift in interest rate expectations from the UK or US, the break is likely to lack for follow through. A break either way is potentially tradable, but I prefer the scenario below 1.6760 with a short-term maximum target at trendline support down at 1.6600.

EURUSD is a similar breakout candidate, but it is less likely to make an errant push without a strong fundamental development. Capital inflows keep the buoyancy towards 1.4000/3900, but traders take the ECB's threat of stimulus should it appreciate seriously. Here, the skew is unnatural, but significant nonetheless. I like fading a move close to (within 50 pips) of 1.4000 or more appropriately a break below 1.3700.

Another interesting candidate that is prone to a break is NZDUSD. This is a more unique case as normal fundamentals would say a break above 0.8750 should have already happened. However, the RBNZ has played the game well to curb bullish progress. Not rallying on bullish news is seriously worrying. If this pair breaks below 0.8550, I like the short side.

For active positions, my long-Aussie trades have lost some traction. Though GBPAUD is still below the neckline of its head-and-shoulders pattern - and still a candidate for a medium-term short bearing - my trailed stop was hit to book the second half of my short for +200. I still have the EURAUD short on and will stick with the medium-term view here. My long-term AUDNZD long meanwhile is retreating from 0.9000 after the Aussie CPI and RBNZ combo. While giving back some gains, this doesn't change my long-term view for the pair and therefore my position.

Finally, my long-term USDCHF long is still in play. The relationship to the euro (capped below 1.4000 by the ECB) and EURCHF (held above 1.2000 by the SNB) is the foundation for my maintaining this position through tumultuous seas.

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Market conditions change, and our strategy should reflect those changes. We have coded the DailyFX-Plus strategies for Breakout, Range and Momentum to adapt to these market shifts.

Ilya Spivak RSS Twitter

Currency Strategist
Ilya Spivak

My Picks: Long USD/CAD, Short GBP/USD
Expertise: Global Macro
Average Time Frame of Trades: 1 week - 6 months

I entered long USD/CAD at 1.0935 and have now booked profit on half of the position at the initial target of 1.1017. The remainder of the trade will remain open, looking for a break above resistance in the 1.1017-47 area to expose 1.1116. The stop-loss has been trailed to the breakeven level (1.0935).

I also sold GBP/USD, setting a stop-loss to be activated on a daily close above 1.6822. Profit on half of the position will be booked and the stop-loss trailed to the breakeven level (1.6789) once prices hit 1.6751. The remainder of the trade left to develop with subsequent downside momentum.

Trading Log

Symbol Direction Status Entry Stop Target Date Analyst

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Currency Central Bank Rate
aud
2.50%
nzd
2.75%
eur
0.25%
cad
1.00%
gbp
0.50%
usd
0.25%
chf
0.00%
jpy
0.10%
Symbol Roll S Roll B
EUR/USD -0.03 0.0
USD/JPY -0.24 0.12
GBP/USD -0.45 0.21
USD/CHF -0.24 0.12
EUR/CHF -0.39 0.18
AUD/USD -3.44 1.6
USD/CAD 0.42 -0.96
NZD/USD -3.84 1.8
EUR/GBP 0.18 -0.48
EUR/JPY -0.39 0.18
GBP/JPY -0.99 0.45
CHF/JPY -0.03 -0.03
Rates shown are the expected rolls in USD for holding one 10k lot today on a typical FXCM Standard account.