Just added final 1/4 position at 174. Stop on all at 175.55. Limit 170.50 on 1/2 and 166.15 on other 1/2.

I'm reading that there was some "must do" sell JPY flows out of Japan that caused the rebound in a thin market. Life insurer flows and the like. Also some Asian central bank rebalancing. My thought is that we have seen the height of the rebound.

Dear Maratha and others,
I am try to learn the fundamental of this GBP/YAN, every where stock market plunged, yet this pair bounce to 174 from today's low 170.50, is it the retrace from the drop from 181 to 170.50? Will be any news that would carry this pair back to 180 in the short term before it test the 166 low?
Thank you.
Paul

Paul:

Yes, I share your frustration... Such is the reality of this pair and weird Asian session dynamics.

Technically, I would agree that it is a retrace. Extremes were reached on the hourly charts. I don't see divergence yet so I'm still a seller and riding out the correction.

Fundamentally, I would also agree that it is difficult to understand and explain such a huge bounce on such massive losses worldwide. But if reading fundamentals to trade, it's all about expectations, and it looks like Asian equities didn't sell off as much as feared.

I like the flow explanation though. The high volatility is causing thin markets so any decent flows have a huge impact. If a central bank decides to sell some of its USD holdings and buy AUD, that has a big impact as shorts scramble to cover in the face of such a lopsided flow. The Japanese also are typically big buyers of foreign currencies so they will always be seen buying dips.

Such is the treachery of the Asian session.

Thank you Broyboy,
I am try to setup a trading system that will fit my style but still no luck yet, right now I limit my self just doing a little scrap on retraces and bounces on this pair. Anytime I go out this end up lost. I have short this pair from 174.55 and took profit on 172.80 then reenter the short on 171.630 hope get a few pips. well I set the stop lost to 180 now and see if EU session will send this pair lower.
Thanks again.
Paul

Fearing a short squeeze, I closed half my short trade just below 173. US equity futures are pointing to a rise for some reason... too tired to really digest it.

Moved stop on remaining 1/2 to 174.55.

Maratha,


My first post, so pls welcome me to the thread

Maratha has been spot on................I followed her Short on GBP/JPY and resulted in +595 pips...........not bad..............I certainly need a few more of those to recover some past losses

Will wait for an opportunity to get back in at the right time...............happy trading guys

Half short still on from 175.50, having survived the squeeze a few hours ago. I'm letting it run since it is really all over the place. I tried adding a couple times under 174 but just ended up closing near break even. If 170.50 cannot be taken out, I think further upside is in store. Otherwise, 166. First, hourly low at 172. If stocks are any indication, I'd say a test of at least 170.50 is in store but that didn't seem to correlate very well earlier... VIX hitting new highs though (80)!

Better to add on a sure(r) thing like a sustained break of 170.50.

HOWEVER, GBP is seeing relative strength versus basically every currency other than USD, JPY, and CHF, making for a very choppy move down. Looking at AUD/JPY, I see a much cleaner trend. I may stay away from shorting this pair after this trade is finished... after credit markets recover, we could see a huge rally in GBP despite deteriorating UK fundamentals and interest rates, having basically priced it all in and more already and with the UK government the most aggressive in dealing with the problems. GBP may become more of a safe haven currency and UK being seen as second to recover after the US.

Closed remaining half at 172.75 (+275 pips, 350 pips on other half, avg 312.5). I just don't see enough substantial downside progress and see divergence and diminishing returns from increasingly bearish news and sentiment. With all the negatives against it yesterday and today, the pair and USD/JPY particularly has held up very well and far above trend lows. Seller exhaustion?

Dear KhiBoy,

Welcome aboard! You joined at a time that is peculiar and I hope that GBPJPY gives you a reason to stay in ForEx markets.

Dear All,

The downside seems questionable as of now, but unless we clear 176, I won't count on the upside. My current plan is to go short at 170 or go long at 176 with wide stops on both trades (100-200 PIPs) and equally wide targets (166 for short, 180 for long)...let's see...as of now, there is quite some noise in the price action...

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

Dear All,

Though the market is choppy, it seems to be heading higher...if US session closes above 173.50 (and preferably above 174), we may see a move to 180+ level over Asian and European sessions...

Of course, there are quite a few hurdles before and volatility may cause swings around these resistance levels.

My current feel is that the market has priced in much of the bad news and is gearing for global slowdown. I don't think the recession/depression is still priced in. If the markets show signs of recessions/depression, we could see GBPJPY dropping much further, much quicker. But if the markets respond to all moves of central banks, then GBPJPY may start heading higher (or hold steady at 170-200 range, if you call 3000 PIPs range as 'steady'). Let's see...this week's close should provide us with good indication...

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

Well I had thought we were seeing a 5th wave down from 215, now I'm not so sure. It could be only 3 waves down and now we are in a 5 wave correction higher. What do you EW guys think?

Maratha:

Amazing how the trend, sentiment, and perceptions can change so quickly, isn't it? Today's close should give us a hint of the next major move. If it starts heading higher we could get real bullish real fast, especially above 181. Granted, I don't think it sustainable, but would be a good trade... a good reason like you say to stay out of the long term trades. VIX at 81 and falling screams rally very soon. I heard someone I follow say VIX could fall to 50 next week. LOL, 50 seems like a warm blanket on a cool fall day now... heck, at this point, if equities even stabilize there is probably room to move higher.

A close above 175 is bullish in my book. I took a half position long at 175.15. Hurdles are 176, 178, 178.50, and 181. I'll add on a good close and target 181 and take half profit at 178.50. Break of 181 and we go to the moon.

Dear BroyB,

Indeed! The market is fickle, but all powerful...

I like the first touch of 176...waiting for the pair to retrace to 174.00-174.50 area to enter a long...stop in 172/173 area and target in 178/180 area...

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

Price is confined to a bullish channel. I will add to my long toward 175 and 174, or on a sustained break of 176 and above the channel.