Forex Strategy: Stay Short EUR/SEK, Enter Short AUD/CAD
I sold EURSEK at 8.7315 after prices completed a bearish Evening Star candlestick pattern at channel and 61.8% Fibonacci retracement resistance. I am expecting Risksbank to switch to a neutral policy stance after December’s rate cut while the ECB begins easing in 2013 as falling “PIIGS” bond yields mark normalization of monetary policy transmission. A break below support at 8.5550 exposes downside targets at 8.4812 and 8.4073. A stop-loss will be triggered on a daily close above 8.7941.
I have also entered short AUDCAD at 1.0340 after prices bounced to retest channel support-turned-resistance, looking to trade the narrowing of the yield differential between the two currencies as the RBA continues to ease while the BOC remains on hold in the months ahead. I am initially targeting 1.0260, with a stop-loss to be a triggered on a daily close above 1.0420.
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