DailyFX Analyst Picks

[DailyFX]

Australian And New Zealand Dollars Plunge, Short-Term Trends In Jeopardy?
Full Article with 8 Analyst Picks

The risk-sensitive Australian and New Zealand currencies came under intense selling pressure through the Asian and European hours of Friday's session. This move has curbed a short-term reversal that was working on a major trend change. Has this rebound been brought to a swift end or is the slow pullback merely a pressure relief in a grander move? Our DailyFX Analysts weigh in on these crosses below.

Today's Analyst Picks By:

• Antonio Sousa
• Jamie Saettele
• Terri Belkas
• David Rodriguez
• John Kicklighter
• Ilya Spivak
• John Rodriguez
• David Song

Chief Strategist Antonio Sousa

My picks: Short AUD/JPY
Expertise: Economics and Behavioral Finance
Average Time Frame of Trades: 1 week - 3 months​

Once again, stock markets around the world are falling sharply on speculation that several firms in the United States' auto industry could declare bankruptcy after the U.S. Senate failed to approve a $14 billion rescue plan. To some extent, some investors thought the stimulus plan for the auto industry could have led to a much broader recovery in the appetite for risky assets like stocks and high yielding currencies and today’s price action in the currency market reflects the unwind of those bets. In fact, I have been short AUD/JPY since the beginning of October and even though I gave back some of this trade gains, I expect the Australian dollar to fall further against the Japanese yen. Indeed, risk aversion combined with de-leveraging in the financial sector is likely to continue helping lower yielding currencies like the Japanese yen. In addition, with the world economy slowing down is reasonable to think that the demand for commodities will also begin to slow down which could only mean further losses to commodity sensitive currencies like the Australian Dollar.

Senior Currency Strategist Jamie Saettele

My picks: Staying with AUDCAD long, against .7813, targets at 88 +
Expertise: Technical
Average Time Frame of Trades: 1 month​

Last week, I wrote that "The AUDCAD range has tightened significantly over the past month. Tight ranges lead to breakouts and extended moves. This range serves as a base that the pair may move significantly higher from. Longer term, the AUDCAD has rallied off of a support line that is drawn off of the 1986 and 2001 lows. It is possible that a long term low is in place at the October low. .8875 is initial resistance (September 19 high)."

After rallying above .8331 resistance, the pair has pulled back slightly today. Still, the bullish base is in place and staying above .7813 keeps the bull trend intact.

DailyFX.com provides free FX news, trading resources, and market analysis to the forex trading community.

 

[DailyFX]

FX Liquidity May Be Fading, But Volatility And Breakout Potential Still High

Analyst picks for: 2008/12/15
Written by the DailyFX Research Team
Full Article

Typically, the year-end period sees considerable position squaring and a slump in volatility as investors book losses or gains for accounting puposes or in anticipation of their being away for the holiday. However, there are few signs of quiet congestion from the currency market this time around. In fact, with financial uncertainty still impressing itself upon a market that is at the extreme of multi-year trends in many cases, the potential for breakouts during the lull in volatility seem higher going forward than a month ago. What pairs is each DailyFX Analyst watching and what is their strategy for the fading liquidity? Read more below.

Senior Currency Strategist Jamie Saettele

My picks: Stay long NZDUSD, move risk up to .5360, target .61
Expertise: Technical
Average Time Frame of Trades: 1 month​

I entered this trade last Monday, citing the continued divergence with RSI on the daily as one of the reasons to take a shot at picking the bottom. Risk can be moved up 60 pips to .5360 (originally at .53). If the NZDUSD rallies above .5572, then move risk to .5417. Major resistance does not begin until .6137/83, which is the November 4 high / 38.2% of .8219-.5186. A short term resistance line has been broken as well.

Currency Strategist Terri Belkas

My picks: Long NZD/USD on an hourly close above 0.5555
Expertise: Fundamentals combined with technicals
Average Time Frame of Trades: 1 - 3 days​

This is actually the opposite of my pick from Friday, when I was looking to short NZD/USD in an effort to play the pair's recent range of approximately 0.5200 - 0.5560. However, with the Federal Reserve expected to cut rates aggressively tomorrow and the lingering possibility that the White House and Treasury will announce bailout funding for the US auto industry, I think there's potential for a pick up in risk appetite and further US dollar weakness. As a result, I'm now looking to buy NZD/USD on an hourly close above 0.5555 to target the 38.2% fib of 0.6954 - 0.5196 at 0.5863. Stops should be set at levels based on preferred risk-reward ratios (i.e. 3:1).

Other Picks:

• Currency Analyst - David Rodriguez
• Currency Analyst - Ilya Spivak
• Currency Analyst - John Rivera

 

[DailyFX]

Euro Rallies And Pound Lags In The Crosses

Analyst picks for: 2008/12/16
Full Article

Since the middle of last week, the euro and pound have taken a bullish turn against the benchmark US dollar. However, through the crosses, there becomes a clear divergence between the strength of these two currencies. See what pair each of our DailyFX analysts is looking at and what they expect as liquidity drains into the year's end.

Chief Strategist Antonio Sousa

My picks: Sell EUR/USD @ 1.37 limit
Expertise: Economics and Behavioral Finance
Average Time Frame of Trades: 1 week - 3 months​

I have been selling short EUR/USD since the currency pair was trading above 1.47. Unfortunately, over the last few weeks I gave back some of this trade gains. Yet, I still expect the euro to fall further against the U.S. dollar. Indeed, I expect more EUR/USD weakness going forward on speculation that a considerable deterioration of the euro zone economy in 2009, could lead to a significant shift of interest rate differentials in favor of the U.S. dollar and keep the EUR/USD under pressure over the next few months.

EUR/USD Retail Traders' Positioning

The ratio of long to short positions in the EURUSD stands at -1.09 as nearly 52% of traders are short, according to the FXCM SSI which measures the positioning of thousands of retail traders. Last week, the ratio was at -1.35 as 57% of open positions were short. Retail traders have been buying the EURUSD and long positions are up by 16.0% since last week. The SSI is a contrarian indicator and signals more EURUSD gains.

Currency Analyst John Rivera

My picks:Short EUR/USD
Expertise: Fundamentals Combined With Technicals
Average Time Frame of Trades: 2-4 Days​

The Euro is approaching major resistance with the 100-Day SMA and the 38.2% Fibo resistance extension of the 1.6041 - 1.2329 decline converging at 1.3750/70. If chairman Bernanke paints a dismal picture today on the U.S. economy then we could see a flight to safety and a return to dollar strength. However, a break above these levels and a rosier outlook from the Fed Chairman would completely change my bias.

Other Analyst Picks

• David Rodriguez
• Ilya Spivak
• John Kicklighter
• Jamie Saettele
• Terri Belkas
• David Song

Dailyfx.com provides free FX news, Trading resources,and market analysis to the forex trading community.

 

[DailyFX]

Have Reversals In The Australian And New Zealand Dollars Curbed Volatility?

Analyst picks for: 2008/12/19
Written by the DailyFX Research Team
Full Article

Have Reversals In The Australian And New Zealand Dollars Curbed Volatility?

The weekend is almost upon us and liquidity looks thin through the rest of the year. With the risk-sensitive Australian and New Zealand dollar turned from reemerging trends, has the market broken any chances for steady trend development before the market fills out once again in early 2009? Should we expect range, breakout or trend conditions from these pairs next week? Read each of DailyFX Analysts' thoughts below.

Currency Strategist John Kicklighter

My picks: Range Trade AUDCAD With Breakout Potential
Expertise: Combining Money Management with Fundamental and Technical Analysis
Average Time Frame of Trades: 3 days - 1 week​

It is very difficult to forecast market activity over the coming two weeks, much less the specific direction of one currency pair. Therefore, my pick from the risk-sensitive Australian and New Zealand dollars crosses falls looks to a pair that has a fundamental and technical charge. If market-wide volatility settles as is typical from past years, AUDJPY is naturally imbued with with a volatlity leverage through its carry trade status. Recently however, as risk sentiment has been put through its paces, we have seen that this pair has moved very little. This alone could impart some breakout pressure as this pair still has considerable risk of shifting fundamentals behind it. The Australian benchmark is at 4.25 percent and the outlook for monetary policy has grown murky. In contrast, the Bank of Japan just cut rates to 0.10 percent last night, leaving little room for a shift. Aside from this general driver, there is also considerable scheduled event risk from the Japanese docket. With growth in doubt and the markets exposed to big movements through thin liquidity, an event-driven reaction from the market can be considerable.

From a technical perspective, AUDJPY has pushed itself into a clear wedge near the bottom of an extensive bear wave. Resistance is seen in a confluence of falling trendlines (one starting with the high from October 7th and another from November 17th). This puts a moving target around 62.00/25. We can also call a horizontal level around 63.75. Support can be seen in the rising trendline from the October 27th swing low that pulls up a floor on price action around 58.75. This will be my range. With reduced position size, I can play the market with range bound trades should the market lose its direction with its liquidity. At the same time, I can widen my stops and not incur too large a loss should we get a breakout (as my smaller position size will reduce the notional exposure). It will be very important to have a breakout scenario established for the coming two weeks as volatility is unpredictable. However, expectations for follow through should be restrained as momentum will struggle without a deep market to carry the ripples of a technical breakout.

Currency Analyst David Rodriguez

My picks: Flat the AUD/USD
Expertise: System Trading
Average Time Frame of Trades: 2-10 weeks​

Last week I called for an AUD/USD long on a break above 0.6800, targeting 0.7000. We did indeed see the pair breach profit targets, and I subsequently went flat. Though it is tempting to chase recent strength, I don't think it is wise to enter positions ahead of notoriously illiquid holiday trading periods. As such, I will remain flat the AUD/USD until the new year.

Other Picks:

• Antonio Sousa: Short AUD/JPY
• Jamie Saettele: stay long AUDCAD, move risk to .8090, target remains .88
• Terri Belkas: Short AUD/CAD
• Ilya Spivak: Short AUD/NZD below 1.1648
• John Rivera: Short NZD/USD

 

[DailyFX]

DailyFX Analysts Position Themselves For A Low-Volume Trading Week

Analyst picks for: 2008/12/22
Full Article

Currency Strategist Terri Belkas

My picks: Sell EUR/USD Rallies
Expertise: Fundamentals Combined With Technicals
Average Time Frame of Trades: 1 - 3 Days​

David Song

My picks: Short GBP/USD
Expertise: Fundamental and Technical
Average Time Frame of Trades: 2 - 10 Days​

GBPUSD has held within a broad range throughout December, and the interest rate outlook favors a bearish outlook for the pair as market participants expect the Bank of England to lower the benchmark interest rate throughout 2009. The pound-dollar tested a new low for the year as it slipped to a low of 1.4468 on 12/4, but bounced back to reach a high of 1.5726 on 12/17. Despite the spike to the upside, the lack of momentum to push above the 50 Day SMA suggests that investors remain bearish against the pound-dollar. Moreover, as the pair has yet to find a bottom, I anticipate the pair to face increased selling pressures over the week, and we may see the pair retest 1.4468 for support over the following weeks.

Other Picks

• David Rodriguez
• Ilya Spivak
• John Rivera

 

[DailyFX]

Recharged Volatility This Week Could Trigger Short-Term Breakouts

Analyst picks for: 2008/12/29
Written by the DailyFX Research Team

Recharged Volatility This Week Could Trigger Short-Term Breakouts

The holiday liquidity drain is still hanging over the markets for the first half of this week. However, the exceptionally high level of volatility and dramatic flux in fundamentals that have preceeded this lull will no doubt pull traders back. And, now, after a period of choppy congestion, the call for breakouts is greater than ever.

Currency Strategist John Kicklighter

My picks: Long GBPUSD
Expertise: Combining Money Management with Fundamental and Technical Analysis
Average Time Frame of Trades: 3 days - 1 week​

It is a new week and almost a new year; but I don't expect the markets to be topped off and volatility to explode within the next few days. For those traders that have a vested accounting interest in waiting until January 1st to reenter the market and those that just want to wait until market conditions are capable of reviving trends, there is little reason to enter the market before the turn of the year. What's more, unlike the religious-based holiday period that is just passing, the New Year celebration is an event that most of the world follows. Altogether, the damper on volatility is vital for holding back breakout pressure that has built up for GBPUSD. A wide range is pulling at the pair and there is a reasonable amount of economic data that has presented a sense of caution. Market-wide volatility is key to trading conditions (more so than usual) for much of this week.

With expectations for supressed momentum, I will look for significant technical levels to hold up to the modest pressure from event risk and thin drives. This is a particularly important scenario for GBPUSD as the pair is now testing its hand at a major triple bottom around 1.4500/75. Historically, this area represents the 61.8 percent retracement of the broad range of price action from January of 1985 up to the highs set in November of last year. However, realistically, most traders still keeping an eye on the market are probably just concerned in recent congestion points and volatility. I will approach this pair with caution. Since liquidity is still thin, the market can be whippy; so I wide stops are a must. Also, I will start with a reduce position size and build up after a confirmed turn to avoid a significant loss on a break against the postion (the market could stall where it is until breaking when volatility returns at the end of the week). I will also be ready to flip my stance should the market make a confirmed move below 1.45.

Currency Analyst David Rodriguez

My picks: Reduce position risk across the board
Expertise: System Trading
Average Time Frame of Trades: 2-10 weeks​

Forex trading market conditions will remain challenging in the week ahead, as illiquid markets could make for especially volatile moves. I will look to reduce position risk across the board--especially given the unpredictability of major moves. I will wait until the new year to take normal-sized positions in the market.

Other Analyst Picks:

• Terri Belkas: Long AUD/USD
• Ilya Spivak: EURUSD Short (pending)
• John Rivera: Long GBP/USD

 

[DailyFX]

The Pound Stalls As The Euro Tumbles: The DailyFX Analysts Find The Opportunities

Analyst picks for: 2009/01/06
Full Article

The Pound Stalls As The Euro Tumbles: The DailyFX Analysts Find The Opportunities

As the first full week of the New Year wears on, traders seem to be taking advantage of the influx of liquidity and volatility to turn the market back to trends. However, the high correlation through the the fourth quarter of 2008 seems to be breaking down with the european currencies taking very different paths. This shift adds a layer of compexity to the market, but it also opens the door to greater potential and opportunities.

Chief Strategist Antonio Sousa

My picks: Remain Short EUR/USD
Expertise: Economics and Behavioral Finance
Average Time Frame of Trades: 1 week - 3 months​

I have been selling short EUR/USD since 1.47 and I expect more EUR/USD weakness in the first quarter of 2009. In fact, I expect a considerable deterioration of the euro zone economy in 2009 which could lead to a significant shift of interest rate differentials in favor of the U.S. dollar and keep the EUR/USD under pressure over the next few months.

Currency Analyst David Rodriguez

My picks: Stay short the EUR/JPY, move risk to 129.73
Expertise: System Trading
Average Time Frame of Trades: 2-10 weeks​

On 12-31 I called for a EUR/JPY short against 131, and so far the trade has paid dividends. I'd like to stay in the trade, but I'd also like to pull down max risk to recent spike-highs of 129.73. Profit targets are not yet set in stone, but a hold of clear congestion near 126.00 would signal that short-term rallies are likely.

Currency Analyst David Song

My picks: Short EUR/USD
Expertise: Fundamentals and Technicals
Average Time Frame of Trades: 2 - 10 Days​

Expectations for an ECB rate cut triggered a freefall in the EURUSD during the last two days of trading, and the euro is likely to weaken further over the week as market participants expect the central bank to lower the benchmark interest rate by at least 50bp this year. After dipping to a low of 1.2329 on 10/28, the pair bounced back to reach a high of 1.4720 on 12/18 but ended the session lower, which suggests that investors are bearish against the euro. The pair dropped 150+pips to break below 1.3525 (50.0% Fib), and may work its way towards 1.3240-50 (61.8% Fib and 50 Day SMA) over the remainder of the week to test for support. A break below this level could lead the pair to retrace the December advance, and may push the euro towards 1.3000 over the near-term.

Other Analyst Picks

• Senior Currency Strategist Jamie Saettele: GBPUSD long (stop order at 1.4850), against 1.4340, target near 1.60
• Currency Strategist John Kicklighter: Pending GBPAUD Short
• Currency Strategist Terri Belkas: Long GBP/CHF on a break above 1.65
• Currency Analyst Ilya Spivak: Continue holding EURUSD short
• Currency Analyst John Rivera: Long GBP/JPY

 

[DailyFX]

Is The Commodity Bloc In Jeopardy Of Reversals As Trends Stumble?

Analyst picks for: 2009/01/09
Written by the DailyFX Research Team
Full Article

Is The Commodity Bloc In Jeopardy Of Reversals As Trends Stumble?

Through the low liquidity of the past few weeks, the relatively high-yielding commodity-based currencies (Canadian, Australian and New Zealand dollars) have benifited from a relatively stable advance against most of their major counterparts. However, that run seems to be in jeopardy as many crosses have claimed significant retracements of these moves, while others threaten to take similar action. Will the Com Bloc lose its traction and revive their long-term bear trends? Our DailyFX Analysts offer their opinion's and pick for the week below.

Chief Strategist Antonio Sousa

My picks: Long USD/CAD
Expertise: Economics and Behavioral Finance
Average Time Frame of Trades: 1 week - 3 months​

The Canadian dollar has been performing relatively well against the U.S. dollar, particularly after the United States Federal Reserve dropped the Fed Funds rate to nearly zero percent. However, I have been short Canadian dollars and I expect the USD/CAD up trend to resume in the first half of 2009. My argument is very simple. With the world economy slowing down is reasonable to think that the demand Canadian products like oil, gold and lumber will also begin to slow down which could only mean further losses to commodity sensitive currencies like the Canadian Dollar.

Other Analyst Picks:
Senior Currency Strategist Jamie Saettele

My picks: Short AUDUSD, against .7275, target .6750
Expertise: Technical
Average Time Frame of Trades: 1 month​

The AUDUSD has reached initial resistance from the confluence of the October 14th high / 38.2% of .9856-.6005 at .7247/56. The structure of the decline on very short term intraday charts (15 min) is promising from a bear’s perspective (decline looks impulsive). Even if wave (2) is not complete, it is likely that the rally from .6005 would experience a sizeable retracement because it is in 3 waves (a flat with structure 3-3-5 could unfold). Initial support is at .6750.

Currency Strategist Terri Belkas

My picks: Short AUD/USD
Expertise: Fundamentals Combined With Technicals
Average Time Frame of Trades: 1 - 3 Days​

This is actually something that I posted in the DailyFX Forum for AUD/USD on Wednesday, but it's still a position that I think is worth playing: short AUD/USD. AUD/USD ran into heavy resistance at the confluence of the 100 SMA and the 50% fib of 0.8524 - 0.6007 at 0.7200/60, and while there is support looming below where we have a rising trendline and the psychological level of 0.7000, 0.6800 provides a decent target as it served as solid support from December 18 - 26.

Other Analyst Picks:

• Currency Analyst David Rodriguez: Flat Commodity Currencies for now
• Currency Analyst Ilya Spivak: Short AUDUSD
• Currency Analyst John Rivera: Long AUDUSD
• Currency Analyst David Song: Short CADJPY

Dailyfx.com provides free FX news, Trading resources,and market analysis to the forex trading community.

 

[DailyFX]

Breakouts A Common Site Across The Currency Market

Breakouts A Common Site Across The Currency Market
Full Article

Volatility has clearly returned after the weekend liquidity lull. With a drive that is finding its source from general risk trends and dollar strength, we are starting the week on enough momentum to drive breakouts and reversals. Our DailyFX Analsyts weigh in on whether this move will hold up and where to take advantage of the evolving market trends.

Currency Strategist John Kicklighter

My picks: Pending USDCAD Breakout
Expertise: Combining Money Management with Fundamental and Technical Analysis
Average Time Frame of Trades: 3 days - 1 week​

The dollar has developed a clear bout of strength since the turn of the week - with significant breakouts and reversals developing across many of the most liquid pairings. In the commodity bloc in fact, AUDUSD and NZDUSD have both taken the first steps towards a bearish breakout on ascending wedge formations that have been developing for the past three months. However, USDCAD has proven itself to be the odd-man out. Congestion is still in place even as another divergence begins to expand between growth and interest rate expectations. Looking at all greenback-based pairs, the dollar has its roots in risk aversion as investor capital seeks the safe haven of Treasuries and other deeply-liquid assets. Compared to the far smaller Canadian markets, the US has the leg up - though this difference has historically only really influenced USDCAD when such sentiment has hit an extreme. More interesting as risk sentiment gradually eases though is the outlook for growth. Canada has been held up very well since the global recession has evolved while dollar traders must continually defer their expectations for the eventual bottom in the US economy.

From a technical perspective, USDCAD has moved from congestion to short-lived breakouts back to congestion three times over the past month. The dollar turn has certainly lifted the pair; but we have not yet seen a remarkable breakout (like we have seen against the Australian and New Zealand currencies. If the dollar cannot carry its momentum against all its counterparts, USDCAD's drive will be the first to stall considering it is still within the boundaries of its technical range. On the other hand, the range between 1.2075 and 1.1775 cannot hold forever. Such congestion is coming up against significant trends and biases that will require resolution (like the falling trend from the triple top back on December 5th). I will look for a confirmed breakout - either bullish above 1.2075 or bearish below 1.1775 - in higher time frame bar close. Short-term momentum is with a bearish bias and such a breakout would likely have the most room to run.

Senior Currency Strategist Jamie Saettele

My picks: Limit entry USDCHF long at 1.1050, against 1.0850, target 1.15
Expertise: Technical
Average Time Frame of Trades: 1 month​

The USDCHF rally from 1.0367 is the beginning of a B wave that is expected to reach Fibonacci resistance at 1.15, eventually. Wave b of B is likely complete at 1.0861. Therefore, wave c of B is underway from 1.0861 (price should remain above there). Short term support begins near 1.11.

Open trades:

NZDUSD long (from last Monday), exit
Short USDJPY (from last Wednesday), move risk to 91.69
Short AUDUSD (from Friday), exit half and move risk to .7139

Currency Analyst John Rivera

My picks:Short CAD/JPY
Expertise: Fundamentals Combined With Technicals
Average Time Frame of Trades: 1-2 Days​

I was clearly too bullish on the global growth story last week and the dismal employment reports has spark a return to risk aversion as the outlook for corporate earnings dimmed. Although, I still believe that the once the get past the U.S. presidential inauguration, we may see the beginning of an extended trend of increasing risk appetite, until then I would have go with current sentiment. Watch out for support at 74.00 with a re-test of 73.00 a possibility.

Other Analyst Picks

• Chief Strategist Antonio Sousa: Short AUD/JPY
• Terri Belkas: Long EUR/GBP
• David Rodriguez: Long Japanese Yen against US Dollar (Short USD/JPY)
• Ilya Spivak: Sell EURUSD below 1.3409
• David Song: Short EUR/USD

Dailyfx.com provides free FX news, Trading resources,and market analysis to the forex trading community.

 

[jeffsmith]

January 13, 2009


EUR/USD

Support for the Day: - 1.3308 and 1.3285(main), where alteration is possible. Break could give 1.3264, where alteration also might be possible. Then follows 1.3233. Break of the concluding would end result in 1.3204. If a strong desire, we would see 1.3180. Carry-over will give 1.3163 and 1.3142.

Resistance for the Day: - 1.3503, 1.3544 and 1.3590(main). Break could give 1.3633, where an alteration is possible. Then comes 1.3667. Break of the concluding would outcome in 1.3682. If a strong desire, we could see 1.3736. Continuation will give 1.3770.

USD/JPY

Support for the Day: - 88.66(main). Break could bring 88.31, where alteration is possible. Then shows 88.05. If a well-built impulse, we would see 87.80. Continuation could give 87.36.

Resistance for the Day: - 90.24 and 90.67(main). Where an alteration might be possible. Break could bring 90.86, where once again an alteration might be possible. Then comes 91.13. If a strong desire, we would see 91.46. Continuation would give 91.77.

EUR/USD

Trading series: 1.3295 - 1.3230
Trend: Descending
Sell at 1.3282 Stop Loss 1.3312 Target Price 1.3242

R1 levels: 1.3375 1.3445 1.3560
S1 levels: 1.3235 1.3080 1.3000