Forex Analyst Picks & Strategies
April 27, 2015
My Picks: Pending short USDOLLAR
With the FOMC decision slated in a couple of days there is plenty of promise for some directional volatility in its aftermath. The price action in the FXCM US Dollar Index has been worrisome over the past month and warns that a deeper correction could be unfolding in USD. Friday’s close below 11,925 technically triggered a minor head & shoulders top in the index that paves the way for a potential decline towards 11,700. However, there is significant risk that that the index is just testing the bottom of its multi-week range and I would prefer to see traction under the lows of the consolidation at 11,890 before adding to or initiating USD short positions.
For more details on these and other setups that interest me, visit me for on DailyFX on Demand where I cover the markets.
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April 22, 2015
My Picks: Short: USDJPY; Pending: GBPUSD, GBPNZD, EURAUD
There are two general themes that are building pressure: a dollar and risk correction. Both are in strong, persistent trends; but each move faces a threat of retreat. For the USD, the risk is more imminent but the corrective move is more likely to be temporary in nature - returning to the dominant trend more readily. For risk, years of speculative build presents are far more concerning situation; but the ultimate turn is more difficult to muster.
Whether a Dollar or Risk pullback, the USDJPY is well positioned - it would be a strong fundamental wind to see both occur at the same time. Marking traction is proving difficult, the next key level for progress is a break below 118.
In a Dollar pullback scenario, there is perhaps speculative access on many of the majors; but the GBPUSD carries the best profile to leverage a pullback. A move above 1.5000 when other Dollar pairs make breaks is my preferred view.
For a revival of the Dollar's strength, there are many prominent trends to choose from, but my view would be that follow through would be difficult to maintain without a correction of the Fed hastening the countdown to a hike, so I view NZDUSD breaking 0.7600 for a short-term outlook as better suited.
Outside of the majors and risk, GBPNZD is in a much larger inverse head-and-shoulders position. A break above 1.9550 would open the door to moving back within a much larger range (to the neckline).
EURAUD is another bigger picture technical setup with a unique play on fundamentals. If the Euro enters another general slump, I would look for a break below 1.3700 as a cue for a long-term trendline support on a 'rough' head and shoulders pattern.
For more details on these and other setups that interest me, visit me for on DailyFX on Demand when I cover the markets.
September 18, 2014
My Picks: Long USD vs. EUR, CHF, AUD
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July 18, 2014
My Picks: Long AUD/NZD, Short EUR/JPY
An upbeat BOJ and fading expectations for further stimulus, coupled with the potential for investor sentiment to sour, could see the Yen strengthen. Meanwhile, the ECB has taken another step towards the extreme dovish end of the monetary policy spectrum.
Pitting their respective currencies against one another may present an opportunity for EUR/JPY shorts, with chart conditions appearing ripe. With a descending trend channel intact, the push below 137.60 paves the way for a descent to the 2014 low at 136.30. Invalidation would occur on a daily close back above the 137.60 mark.
Fading expectations for further rate hikes from the RBNZ, alongside souring dairy prices may leave the Kiwi vulnerable to a correction. Yet the potential for carry demand to support the currency remains a risk to short NZD/USD positions, thus pitting it against its high-yielding sibling the AUD may be a safer alternative.
This puts a multi-decade range-bottom near 1.0500 for AUD/NZD in focus. The pair’s most recent bounce may open the 1.0900 handle, while a turn back below 1.0700 would place the immediate risk to the downside.
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