Conflicting stories on AIG... but sounds like most likely scenario is monetary assistance from the Fed one way or another. Hard to say what happens to the equity then but this would be good for the markets (at least near term). We should rally IMHO.

Then again what do I know... I'm just a retail trader.

Break of 187 would remove my bullish bias.

Trade: long on 190 breakout.
Targets: 192.40 or falling trendline, 193.50, 195.50.
Tight stop below 189.90.

USD/JPY has pushed through the stiff 200 day MA at 106.30 and 106-106.40 congestion area of prior hourly highs.

Also of note is the potential for GBP/USD to break out of consolidation above 1.79 and then 1.8, etc.

UPDATE: CLOSED
Looks like we could get consolidation into European open. Rebuy at rising trendline (currently 188).

187 more or less held
Looking to buy
higher daily high would indicate trend reversal (190.775)

Initial test of falling 15 min trendline failed... going back down now... may be developing a downward sloping wedge with base around 185-186 which means eventually a downside break.

Second attempt seems to be sticking propelled by GBPUSD breakout.

Higher daily high but failed just below falling hourly trendline that seems to be containing price to a downward slopping channel or wedge.

It will get back to 185. JPY might strengthen some more and GBP is not going to stay cushy at 1.82 for long.

Well, that went wrong. Hope anyone who sold used a tight stoploss. I still think there is some big downside to GBPJPY before it recovers.

The Whipsaw appears to have driven out many regulars from these forums. Where is everybody?

I would like to see a test and hold of that monthly rising trendline around 180 before getting really confident in the long side for any period of time longer than a day or week, but this week it has been the prevailing trend as I suspected, despite spiking risk aversion.

I think there is a general lack of interest in trading JPY crosses in general due to fundamental uncertainty and focus on the USD causing inverted trading patterns in GBPUSD and USDJPY. Small flows are having a large effect and we did get quite a wash out of long term longs the past couple weeks so perhaps positioning is too short.

Given that asset values have become quite attractive, interest may be coming back to fund investments with Yen.

Dear All,

What a week! 195-185-197...some range! I'm ready to take a long position at 197 break...196.50 is the area of 38.2% Fib of drop from 216 to 184. And a weekly close above 196.50 looks bullish for sure.

I also plan to start building a small carry position in GBPJPY, but want to wait till 2nd October (when SEC removes short selling regulation) to see how markets are taking in the news of financial bail out.

If markets start to recover, I won't be surprized to see GBPJPY trading at 220+ in the next 3-4 months. If we build carry from 195-200 area and ride it through to 220 over next 12 months, that would be a sweet booster to the account!

No harm in little day dreaming, right?

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

nice to see you back Maratha! We have been only daydreaming for years! Problem is, we have been unable to accept temporary losses of 500 pips to ride a 25,000 pip gain... and that is why we miss the big picture.

I think the stock market will bleed and risk aversion will rule. Sep/Oct are bear months for US stock market. Any artificial way to prevent selling will lead to other serious problems - the liquidity will worsen, and big investors won't trade equity until their software is able to predict pricing accurately. Banning shortsale kills all option-valuation software. I wonder how many quantitative developers and analysts will be laid off this week from finance industry because years of their work was destroyed by Paulson and Cox.

I still believe in your earlier assessment that carry trade won't return so soon. JPY just can't rally yet, not until december (stock markets usually recover in nov/december). Today's market rally is for suckers, driven by some new " US policies" who effects are unknown and by interventions of various central banks around the world. That is not a healthy recovery of the stock market.

Dear Dollarbull,

Well, the pair is still bobbing up and down...let's see if it can break 197.00...wouldn't mind a half position trade at 197 on either failure or break (long at 197.50 or short at 196.75).

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

Dear All,

Wow, didn't think my short at 196.75 would be filled so fast...have moved the stop to b/e as the price is quite volatile...looking for retest of 193 handle as first target, but ready to fold on bounce out of 194 area as well...

Attached Thumbnails

 

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

Dear All,

Well, the short was stopped at b/e...wild price moves...ready to reenter short at 197 on next failure or long at 197.50 on break...

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

Would you consider what just happened a failure?

Dear Fish,

Yes, have reentered the shorts at same price 196.75 again, stop at 197.25 and target of 193...

Of course, given how fast price is moving, won't be surprized to see my trade getting lost in the noise of the market.

It is interesting to see that GBP and EUR strengthened against USD, but JPY has been a late joiner...let's see whether JPY outpaces GBP or not...

As of now, no currency has clear advantage, so more see-saw is likely...

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

DENIED!! He who hesitates makes no trades! Too late for me, I fear.

Dear Fish,

He who hesitates, preserves the capital! If you want to enter the trade, you can do so on break of 195.50. If the pair pushes through 197 again, 198 is the next area of good resistance...

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