If price unable close below 226.40 , it form a quadra bottom on 15 minutes time frame. Tokyo pivot hold as a strong support till now...
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DislikedDoes the BOE rate cut ease the UK credit crisis. Please advice. ThannksIgnored
DislikedNo early end to the credit squeeze
Published: November 20 2007 22:56 | Last updated: November 20 2007 22:56
The credit squeeze is turning from a firm embrace into an uncomfortable bear hug. News on both sides of the Atlantic suggests that lenders will need to raise new capital and, even then, will have to take on less new business. Tighter conditions look set to continue and there is little that anyone can do to ease them.
On Tuesday, Freddie Mac, a repackager of home mortgages sponsored by the US government, announced a $2bn third-quarter loss, and Paragon, a UK mortgage company, announced that it was struggling to renew its financing facilities. Interbank lending rates have crept up again in recent weeks.
Freddie Macís loss, an unpleasant mixture of credit impairment and falls in the value of interest rate derivatives, matters less than its resulting shortage of capital. So far, prime mortgages have been little affected by turmoil in the securitisation markets but if Freddie Mac were unable to buy or guarantee as many loans, it could further affect the availability of credit to prospective housebuyers in the US.
The trouble at Paragon may have a similar effect, save that the group of housebuyers affected is landlords, not prime owner-occupiers. Also significant is that as much as £2.3bn of current Paragon mortgages will continue to be financed by its banking syndicate: another example of how the credit squeeze will push assets back on to the balance sheets of large banks.
To add to the gloom, there are also signs that the deterioration in US credit quality is spreading from subprime mortgages to auto loans, unsecured consumer finance and credit cards, where HSBC, a big subprime lender, has had to make higher provisions.
Given that there has been little rise in US unemployment, the borrowers struggling now would probably never have been able to repay. Provided there is no surge in layoffs then credit losses should be contained, but damage to the wider US economy now seems unavoidable.
The credit squeeze will cut corporate profits, especially in the financial sector, and reduce demand in the economy. The effects could last for several years and little can be done to mitigate them. Investors should provide capital, at a suitably high price, to banks with sound business models: if the banking system cannot access funds then the squeeze will be longer lasting and more painful. Lower central bank interest rates may help a little but cannot improve credit quality, and inflation is a concern. Ultimately, the credit turmoil is the price of past excesses and will not abate until they are squeezed out of the financial system.
DislikedKarmo, what are you thoughts about the price ranging right now? Would I be wrong if I said that it would drop down to 224.50 and then bounce back upIgnored
DislikedIf price unable close below 226.40 , it form a quadra bottom on 15 minutes time frame. Tokyo pivot hold as a strong support till now...Ignored
DislikedAnyone know how far down gbp/jpy go or is it going to turn back up would like to know what you guys thinkIgnored
DislikedThe two currency pairs with a direct impact on G/J, are G/U and U/J. G/U has been mostly rising all day, while U/J has been falling. G/J has been caught in the middle for the past 4 hours. Once they both start moving the same direction we'll see some big moves by G/J.
U/J has managed to push G/J beneath the 226.40 support, where there's a confluence of the daily pivot and the 1hr 50sma. This might become the new area of resistance. The 15min chart shows bearish QQE's, as does the 30min and 1hr. Price is staying below the Gann on all of these charts, as well. I'm expecting to see 225 within the next few hours, and possibly 224.50 after that.Ignored
DislikedWhat fundamental is causing this U/J heavy volatile move?Ignored
DislikedI think it's a combination of the weak dollar, and todays' Nikkei stock market. But I'm a technical trader, so I wouldn't be surprised if a fundamental trader had a different view of things.Ignored
DislikedAnd ironically that makes the yen stronger, correct?Ignored
DislikedThe U/J has not had a close below 109.00 since it came up through that level in June 2005. It's found support at that level since, the last time being May of 2006. It's touched that level once again tonight. I think that will be an important psych level to go through.Ignored
DislikedEveryone should keep in mind that the Japanese warned speculators last week that the yen was getting too strong...that warning came just above the 110 level. If the Japanese Cental Bank steps, all charts are off with the UJ. No one knows what their squeal point is, but we must be getting close. Maybe the yen can continue to strengthen despite central bank intervention, but my little account dosen't want to be involved in that fight!Ignored