This weeks GBP/JPY Analysis & Predictions

Looking at my charts, we will have a big fall next week..

Weekly chart:

I don't remember what we call this last candle but it is a sign of a big fall

http://img105.imageshack.us/img105/9029/gjvr1.gif


Daily chart:

On the daily chart, we have completed 50% retracement as you can see


http://img167.imageshack.us/img167/2357/gjog0.gif


4H chart:

We are in a nice downtrend channel, and if we take the fib from 244 to the low of 219, we have completed 61.8% retracement, so to me we should be heading downwards from here..

http://img252.imageshack.us/img252/8899/gjdh6.gif

Going back to a chart I posted a bit over a week ago, it seems to be working out OK. http://www.forexfactory.com/showthre...#post156098 7

The highs were not being reached and the lows went lower so I lost a bit of faith - but it is playing out well now. I have the high at about 238.80 (but could be 100 pips or so lower) before we see that large fall to retest the low in the 219 region. Based on some time analysis (not mine), the high should be in on the 4th or 5th of Sep (Tue/Wed).

I suspect it is going to fail and reverse around 221.50 and head all the way up to the 242 to 245 region (red circle). That will be a good test to see whether the bulls can pull it out and if so then up, up and away we go. I do, however, expect it to fail and then we could possibly see the low break (219).

I have attached the chart that I posted a little over a week ago and a new one with further projections.

Z

Surely more people can contribute to this thread?

My plan is to enter long on the breakout of the descending trendline (shaded oval). Reverse in the 228 region (228.78 to be exact) but I always give it a little slack. Target will be a bumpy road to the 221 region. As they say, a picture's worth a thousand words.

I've been doing some backward research on auslanco's original method. to me it was best so far, at least on my mt4 platform.

however, i would like to 'add' (maybe aus alread made it clear) that the best trades (or lets say 'the most flauless trades') that i've seen using this strategy were the ones made by the m30 TF with h4 confirmation. if the h4 qqe crossed up for example, one should wait for m30 qqe to cross upwards AFTER TFT (Gann) upward confirmation. then and then only would one place a long trade when the price is close the 5sma with stop loss of 50-70 pips below the gann line, however, with no TP. the trade will be closed after 30m reversal is confirmed.

please not that vise versa goes for short trades.
cautioun: h4 uptrend confirmation not only comes from the qqe, but also when TFT crosses upwards, if either were in opposit direct, that's when i stay out of the market, even if i saw good trades. same goes for downtrend confirmation.

i want you guys to test it out for me and correct me if i'm wrong.

i've made a bit over 500 pips last week and 950 pips the week before based on that strategy (12 total trades 9 wins 3 minor losses). my last trade was yesturday 6:30pm GMT, and exited at break even when m30 confirmed reversal.

i'm with you zoran, however your pridiction is conditioned (in my openion) by first breaking the upper trendline of the chart posted in this reply.
however if the lower trendline is broken FIRST, i would guess we will have to retest last month's support first.

Thanks Aus for including me onto the panel. I usually tend to keep my comments (well, most of them ) to myself.

Here is an interesting article I came across while the scouring the web my daily fix (news). I hope that everyone can learn from history.

Financial crises: Lessons from history
Analysis
By Steve Schifferes
Economics reporter, BBC News




The current market jitters are centred on disturbances in the world's credit markets. Worries about the viability of sub-prime mortgage lending have spread around the financial system, and the central banks have been forced to pump in billions of dollars to oil the wheels of lending.
But what happened in previous financial crises, and what are the lessons for today?
There have been a growing number of financial crises in the world, according to the International Monetary Fund (IMF).
Among the key lessons of previous major financial crises are:

1. Globalisation has increased the frequency and spread of financial crises, but not necessarily their severity
2. Early intervention by central banks is more effective in limiting their spread than later moves
3. It is difficult to tell at the time whether a financial crisis will have broader economic consequences
4. Regulators often cannot keep up with the pace of financial innovation that may trigger a crisis.

THE DOT.COM CRASH, 2000
During the late 1990s, stock markets became beguiled by the rise of internet companies such as Amazon and AOL, which seemed to be ushering in a new era for the economy.


Their shares soared when they listed on the Nasdaq stock market, despite that fact that few of the firms actually made a profit.
The boom peaked when internet service provider AOL bought traditional media company Time Warner for nearly $200bn in January 2000.
But in March 2000, the bubble burst, and the technology-weighted Nasdaq index fell by 78% by October 2002.
The crash had wider repercussions, with business investment falling and the US economy slowing in the following year, a process exacerbated by the 9/11 attacks, which led to the temporary closure of the financial markets.
But the Federal Reserve, the US central bank, cut interest rates throughout 2001, gradually lowering rates from 6.25% to 1% to stimulate economic growth.
LONG-TERM CAPITAL MANAGEMENT, 1998
The collapse of hedge fund Long-Term Capital Market (LTCM) occurred during the final stage of the world financial crisis that began in Asia in 1997 and spread to Russia and Brazil in 1998.
LTCM was a hedge fund set up by Nobel Prize winners Myron Scholes and Robert Merton to trade bonds. The professors believed that in the long run, the interest rates on different government bonds would converge, and the hedge fund traded on the small differences in the rates.

But when Russia defaulted on its government bonds in August 1998, investors fled from other government paper to the safe haven of US Treasury bonds, and interest rate differences between bonds increased sharply.
LTCM, which had borrowed a lot of money from other companies, stood to lose billions of dollars - and in order to liquidate its positions it would have to sell Treasury bonds, plunging the US credit markets into turmoil and forcing up interest rates.
So the Fed decided that a rescue was needed. It called together the leading US banks, many of whom had invested in LTCM, and persuaded them to put in $3.65bn to save the firm from imminent collapse.
The Fed itself made an emergency rate cut in October 1998 and markets soon returned to stability. LTCM itself was liquidated in 2000.
THE CRASH OF 1987
US stock markets suffered their largest peacetime one-day fall yet on 19 October 1987, when the Dow Jones Industrial Average index of shares in leading US companies dropped 22% and European and Japanese markets followed suit.

The losses were triggered by the widespread belief that insider trading and company takeovers on borrowed money were dominating the markets, while the US economy was entering into an economic slowdown.
There were also worries about the value of the US dollar, which had been declining on international markets.
These fears grew when Germany raised a key interest rate, boosting the value of its currency.
Newly-introduced computerised trading systems exacerbated the stock market declines, as sell orders were executed automatically.
Concerns that major banks might go bust led the Fed and other major central banks to lower interest rates sharply.
"Circuit-breakers" were also introduced to limit program trading and allow the authorities to suspend all trades for short periods.
The crash seemed to have little direct economic effect and stock markets soon recovered. But the lower interest rates, especially in the UK, may have contributed to the housing market bubble of 1988-89 and to the pressures on the pound sterling which led to the devaluation of 1992.
The crash also showed that global stock markets were now closely linked, and changes in economic policy in one country could affect markets around the world. Laws on insider trading were also tightened up in the US and UK.
US SAVINGS AND LOAN SCANDAL, 1985
US Savings and Loans institutions were local banks which made home loans and took deposits from retail investors, similar to building societies in the UK.
Under financial deregulation in the 1980s, they were allowed to engage in more complex, and often unwise, financial transactions, competing with the big commercial banks.
By 1985, many of these institutions were all but bankrupt, and a run began on S&L institutions in Ohio and Maryland.
The US government insured many of the individual deposits in the S&Ls, and therefore had a big financial liability when they collapsed.
It set up the Resolution Trust Company to take over and sell any S&L assets that it could, including repossessed homes, taking over the bankrupt institutions.
The cost of the bail-out eventually totalled about $150bn.
However, the crisis probably strengthened the bigger banks by weeding out their weaker rivals, and laid the groundwork for the wave of mergers and consolidations in the retail banking sector in the 1990s.
THE CRASH OF 1929
The Wall Street crash of 1929, "Black Thursday," was an event that sent the US and indeed the global economy into a tailspin, contributing to the Great Depression of the 1930s.

After a huge speculative rise in the late 1920s, based partly on the rise of new industries such as radio broadcasting and carmaking, shares fell by 13% on Thursday, 24 October.
Despite efforts by the stock market authorities to stabilise the market, stocks fell by another 11% the following Tuesday, 29 October.
By the time the market had reached bottom in 1932, 90% had been wiped off the value of shares. It took 25 years before the Dow Jones industrial average recovered to its 1929 level.
The effect on the real economy was severe, as widespread share ownership meant that the losses were felt by many middle-class consumers.
They cut their purchases of big consumer goods such as cars and homes, while businesses postponed investment and closed factories.
By 1932, the US economy had declined by half, and one-third of the workforce was unemployed.
The whole US financial system also went into meltdown, with a shutdown of the entire banking system in March 1933 by the time the new President, Franklin Roosevelt took office and launched the New Deal.
Many economists on both left and right have criticised the response of the authorities as inadequate.
The US central bank actually raised interest rates to protect the value of the dollar and preserve the gold standard, while the US government raised tariffs and ran a budget surplus.
New Deal measures alleviated some of the worst problems of the Depression, but the US economy did not fully recover until World War II, when massive military spending eliminated unemployment and boosted growth.
The New Deal also introduced extensive regulation of financial markets and the banking system through the creation of the Securities and Exchange Commission (SEC) and the Federal Deposit Insurance Corporation (FDIC), and the separation of commercial and retail banking through the Glass-Steagall Act.
OVEREND & GUERNEY, 1866; BARINGS, 1890
The failure of a key London bank in 1866 led to a key change in the role of central banks in managing financial crises.


Overend and Guerney was a discount bank which provided money for commercial and retail banks in London, the world's financial centre. When it declared bankruptcy in May 1866, many smaller banks were unable to get funds and went under, even though they were otherwise solvent.
As a result, reformers like Walter Bagehot advocated a new role for the Bank of England as the "lender of last resort" to provide liquidity (cash) to the financial system during crises, in order to prevent a failure of one bank spilling over and affect all the others ("systemic failure").
The new doctrine was implemented in the Barings Crisis in 1890, when losses by a leading UK bank, Barings, made on its investments in Argentina, were covered by the Bank of England to prevent a systemic collapse of UK banking.
Secret negotiations by the Bank and London financiers led to the creation of an £18m rescue fund in November 1890, before the extent of Barings' losses became publicly known. The bankers also organised a committee to renegotiate the outstanding debts owed by Argentina, but a banking crisis engulfed the country and foreign lending to Argentina dried up for a decade.

Story from BBC NEWS:
http://news.bbc.co.uk/go/pr/fr/-/1/h...ss/6958091.stm

Published: 2007/09/03 05:17:55 GMT

We have come to the test point. If anyone didn't enter long off the bounce (from the bottom channel line) then another opportunity is coming. If that upper trendline breaks then a 400 pip long should be in order. A total of 600 pips from the bottom channel line.

The reversal should occur in the 238 region so that will be a good take profit and reverse area. I have the top reversal point at 238.80 (but it could be lower). Now do NOT trade this analysis unless you know what you are doing!

So far all charts are playing as planned. I will update with results as they complete. Also, I have been informed that a Gann timepoint reversal should occur on the 4th or 5th of Sep so that ties in nicely with my analysis.

Z

I should also mention that if the bottom channel line breaks, then that will be a nice short entry back to 229 although I'm not expecting that to happen.

I can see that the upper trendline was pierced but then price rebounded off it. This could be a normal reaction to the resistance at that level. I will wait and see what happens now. If price breaks the bottom line (upwards) I will re-enter long again. If these lines hold, then shorts will most likely be good. There is not a lot of action at the moment so I'll wait for some clearer signals.

I'm still favouring an upward movement although it will take some effort to break the upper resistance.

The upward movement is starting to gain some momentum. Perhaps the news can push it up through the current resistance levels. If 235.5 breaks, the ride into the 238 region should be relatively smooth.

now u all know about the FUNDAMENTALS:

TECHNICALS:


THE CHARTS SAY IT ALL:

TOOLS I USE TO ANALYSE: MONTHLY PIVOT AND ITS S/R LEVELS, FIBS, MACD, QQE, PSAR, 50EMA, 100SMA (2OOSMA/EMA-IN LARGER TF), CCI(18), CANDLESTICK PATTERNS, STOCHS, AND RECENT S/R LEVELS
EMA CROSSOVERS FOR SMALLER T/F TREND INDICATION: 6EMA/13 SMA AND 10EMA/21 EMA

I KEEP AN EYE OUT ON ALL OF THE ABOVE


PS-- RETRACEMENTS POSSIBLE: ON 4HR TO 100SMA , 5SMA OR 38.2% FIB

POINTS:

GOOD ANGLE/SEPARATION OF 21/10EMA ON 4HR

ENJOY

PS--ALWAYS WATCH THE 50EMA ON 15MIN/30MIN/1HR

Weekly analysis:

Weekly chart:

As I had predicted that last week would be a bear week and it indeed turned out to be so, now looking at the weekly fibonacci levels, GJ is looking to retest the 50%, 61.8% and even touching 76.4% which is 212.45 area, the weekly chart is still bullish unless we get a weekly bar closing below the lower TL, then things will change but in my prediction we will touch the 76.4% in the coming weeks

http://img509.imageshack.us/img509/1134/gjmw1.gif


Daily chart:

As we have seen in the past weeks, GJ retraced 50% of the move down and it has started to resume it's bearish trend now. The last day of the week, the candle closed well below the 38.2% fibonacci level, the next level is the 23.6% which is also close to the weekly 50%

http://img295.imageshack.us/img295/526/gjst9.gif


4H chart:

Looking at the Green fibs, we completed 61.8% retracement and price has started to resume it's bearish trend. I also added the orange fibs, all these fibonacci are good levels to keep an eye on, the beast will take a rest at some of these levels like it did at the 76.4% (orange)

http://img172.imageshack.us/img172/9167/gjwk0.gif


so, in simple words.. I also see 212 in the coming weeks/month

Here is a possible Guppy scenario. Caveat being that 227 must hold. Reversal target will be 238 though there is a small chance it could go to 244.

I wouldn't enter long until the trendline breaks. That is the first obstacle at the moment. So remember that you can throw this chart in the bin if 227 breaks. Enough said

Here is a present for markam

My DOW projection. The only caveat being that should 13,700 break north then I'm in with the bulls (longer term) otherwise south we go (as expected).

Oops, forgot the chart.

In case anyone is interested, I learnt to trade on the Euro and thought I would revisit. A short around 1.3950 looks good. Initially for around 100 pips but longer term could produce about 500 (if you are patient enough).

There is a classic AB=CD pattern with a reversal at 1.3965 though I would suggest scaling in at a lower level. My original analysis was a hit on the top line as we are currently in a rising wedge. This could confirm a major trend reversal with a potential target back to 1.1600 over some years.

Here is the daily.

Here is the weekly analysis so this could take some time to complete! The wedge is ripe for a break! You do get about 1 pip every 4 days in interest on the short so it all adds up in the end!

This past week was excellent, hopefully next week will be better and with bigger moves since the Fed is going to have a little party with us lol

Ok, let's get to analyzing..
After learning about the great Moving Averages (50ema, 100sma, 200ema) from our MA master 'Hakuna Matata', I have drawn my weekly fibonacci levels differently this week (weekly chart) and I will explain to you why.

As we know, Moving Averages provide Support/Resistance levels, so now have a look at the chart and see how nicely price reacted (I'm amazed!). Now let's add some Fibo's to our cocktail, the 200ema acted as a support (it barely touched it, but I'll take it as support) on 17/07/05 , now if you draw a Fibonacci retracement from this low to the high of 251.07

http://img405.imageshack.us/img405/1646/gjij9.gif

Now look at that 100sma and 50% level, they were both close to each other and price bounced off that area perfectly. I said last week 212 is next on the cards for GJ but I'll change it to 212-214, since our 61.8% fibo is at 215 and 200ema is just below it, 212-214 should be achieavable in the coming weeks/months.

Remember now, we have lots of supports to break before getting there.. I don't trade based on weekly charts, I just have them in order to have an idea of where price might go next.


Daily chart:

That descending TL from the top has been acting as a support lately, but I believe it will be broken and next support area for GJ based on the daily chart is the 23.6% fibo level.

http://img514.imageshack.us/img514/250/gjna5.gif


4H chart:

The price has been bouncing off the green 61.8%, 50%, and 38.2% fibo levels, once price breaks the 38.2% + TL (close to my 2nd TP), 23.6% is next where we also have a weekly TL waiting for us there.


http://img460.imageshack.us/img460/1905/gjgw5.gif

Guppy Update 1

My analysis has not changed as posted 3 weeks ago. The chart is still in play and I am waiting for price to touch the 238 region. This will be valid so long as 227 holds (which is the recent registered low). Eventual target is the 221 region whether that occurs by touching 238 or breaking 227. I am still favouring a touch in the 238 region to gather more bears as the resistance at 235 was not strong enough to break the support at 227.

Original charts attached as posted 3 weeks earlier - these are short term charts so normally take days/weeks to complete. Links are here

http://www.forexfactory.com/showthre...87#post1560987
http://www.forexfactory.com/showthre...76#post1565976

Guppy Update 2

So in the mean time, we have been ranging between the recent high of 235 and the recent low of 227 as shown in the purple shaded area. Neither the bulls or bears are currently strong enough to force a break-out.

The coming FOMC meeting (on Tuesday) could change all that. I believe that we need to go up first before we can come down. The descending trendline is now crossing with the ascending one so that could be another indication that longs are good.

So in words again, my target is 238 so long as 227 holds with an eventual target of 221. Until then I will be playing the intraday charts.

Z

PS. I have been following this pair (GBP/JPY) for a few months only so I am not entirely sure how FOMC will affect it. I started currency trading on the Euro (EUR/USD) and then moved to cable (GBP/USD), which both have the USD component so are more sensitive to this type of event.