Dear All,

So far the technicals are acting well (surprising, given the volatility and thin markets)..the price has reentered the downward sloping channel on dailies and currently bouncing off the upward sloping trendline at 190 from Thursday low and today's low.

If 190 gives way in Asia, then 188 is the next target (my short entry level). The European session should validate the direction on the pair. If 188 gives way, then 180 should be in sight, while if 195 is breached, then 200+ should come in picture.

I want to avoid entering the short in Asian session today, so if 188 gives way in Asia, will wait for EU open before entering the trade...my next entry point will be 185.50 w stop at 186 and same target of 180.

__________________
"The market can stay irrational longer than you can stay solvent" - Keynes

I think it will go down on Monday. Lehman will file for bankruptcy and it will spook the equity markets. USD might stage a quick rally ending the dreams of GBP, JPY runups.

Dear DollarBull,

Well, the markets are shell shocked as of now! I've taken a short at 190 just now with stop at 191 and target of 180. Will fold if the pair bounces out of 187.50-188 area.

__________________
"The market can stay irrational longer than you can stay solvent" - Keynes

I think there is a pretty good chance you will score big once again. I am not comfortable with GBP since UK economy isn't going to behave much differently from US economy. In spite of BoE's claims that rates won't change for a year, they will be forced to cut soon. Hence, it is a question of whether GBP goes down first (means 180 or lower for GBPJPY) or JPY hitting the carry trade track (means 220 or higher for GBPJPY). If UK economy gets hit then JPY isn't going to carry trade.

Dear DollarBull,

True..but, for the time being, I find the case for carry revival this week hard to swallow. Buyers may emerge towards 170 level, but Asia may continue sell off started in the mid US session.

Have moved my stop to b/e on the short trade. Time to sit on the sides and let market find its way to my limit or stop...

__________________
"The market can stay irrational longer than you can stay solvent" - Keynes

Well, the doomsday scenario is playing out, as AIG is now downgraded by S&P and Moody's and running out of time to raise capital. If they cannot raise capital, they are finished. This could have a domino effect as many other firms are exposed to AIG debt and will have to write down the value of that debt.

I was looking for buying opportunities but I am now also targetting 180 area +-50 pips, an area of several weekly lows and rising monthly trendline support. Beyond that, 174.50 (50% fibo of 127-151), 169-170, 165.50, and 149-152.

What changed my mind? Well, mostly a close below 1200 on the S&P 500 and the very serious systemic risk an AIG bankruptcy poses. Of course a delay of bankruptcy could cause a sharp rally but really it's hard to imagine it lasting. I expect weakening data across the globe...

My concern or obstacle to this move is if the GBP rallies hard against the USD and limits the fall or overpowers despite a fall in USDJPY. It may be better to play the USDJPY directly or another JPY cross. Sometimes a surer bet is short AUDJPY as the AUD usually falls across the board on spikes in risk aversion, not to mention the tighter spreads, a rare thing with GBPJPY these days. I'm very surprised the 186 lows have not been retested or broken yet as other JPY crosses have done so. It may be that the GBP is just too oversold.

Closed all shorts; looking to sell a bounce against 189...

Dear BroyB,

Indeed...my US assets are depleting every day 'cause of this melt down and I don't see any recovery on horizon till all skeletons are out of the closet (read mid 2009).

Well, time to hunker down and look towards good buying opportunities...every bear market is followed by the bull market...till then shorts and put options seem the way to go...

For GBPJPY, yes GBP may strengthen and looks like BoJ is back to its old habit of intervening at 104 level..so, we may very well see a strong bounce out of 186/187 area on a good news from AIG tomorrow and/or more BoJ intervention.

To be frank, I think BoJ is under pressure from Fed...'cause BoJ did allow Yen to go as low as 95, so why should it interven at 104 now? Let's see how it plays out...

Have lowered my stop to 188...but, I think intervention/no intervention, the market seems poised to test 180 one way or other...so selling rallies will be my strategy...

The volatility is amazing...plus minus 50 PIPs in matter of minutes....

__________________
"The market can stay irrational longer than you can stay solvent" - Keynes

The speculation on markets and fundamentals seems to be the same of the penny markets. The news seems to precede the play, which I believe is a lot of what we are seeing. Seems funny how after gains and falls, news comes out and the speculation steers away from the best market guesses, when the techies can keep playing the same game as always.

Kind of makes you wonder, which comes first, the chicken or the egg....

Still here dancing with a coupled paired pairs and still playing the plays. Albeit better then an average week, over 300 pips on today's scoreboard.

LETS GO EURO!

Love to against the trend! (and lose frequently).

Hoping to see a rally to 190+. Reason? None. Just gut feeling. Ok, let me try to reason it at all - All JPY crosses have been hammered. They will recover. Since the pattern is not isolated to GBPJPY, it too might recover. There! Tightstop loss at 20 pips intervals.

Maratha:

It really is amazing in a sad way. Thankfully I went to 50% cash in my investment portfolio and very defensive at the start of the year (if you take my word for it ) but it still hurts and I lost a lot messing around buying toward the top.

This pair is a widow maker... Best thing to do is to get small and wide. New trend lows puts 180 in sight but who knows how we'll get there. One thing is for sure... the whippiness gives me a headache! :/

Dear BroyB,

Indeed! Actually, once AIG fate is decided, I'm planing to start buying financials. I think, the market is throwing babies with bath water...and I'm looking for those babies...

Dear DollarBull,

Yes, the temptation to trade against the trend....I would think that if 187 is taken out, then there is a case for reversal, othereise, we may be seeing just the noise typical of such large moves...

Have lowered stop on my short from 190 to 187 now. Once, 185 falls again, will lower it to 186.

__________________
"The market can stay irrational longer than you can stay solvent" - Keynes

Not to get greedy, 185.5 to 190.0 is enough for a day. 190 won't last. The stock market has to sell off - this is bear season until november for stocks.

I will taks a small short position at 190.0.

Alright. 200... here we come!

DollarBull:

IMHO... take your short profits now :P

Ahh... nice call on 190. Looks like AIG equity is toast. Still, not sure what your target is... don't think we'll see 185 again soon.

I think we may see 187. I took profit at 188.50 already. I don't like whipsaws though they are greatly tempting.

Dear All,

Wow! Volatility doesn't go down....my short was stopped at 187 (+300 PIPs)..on the sidelines for now...basically, have some other stuff to take care of this week, so will stay on the side...let the market settle down a little...

__________________
"The market can stay irrational longer than you can stay solvent" - Keynes