Auslanco - GBP/JPY and GBP/USD (newstrade)

(JAN 2005=100) INDEX GBP/USD EUR/GBP
PREVIOUS CLOSE 82.3 1.5632 0.8231
OPEN 82.4 1.5551 0.8241
10 AM 82.6 1.5525 0.8216
NOON 82.6 1.5482 0.8199
2 PM 82.7 1.5512 0.8187
4 PM


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August 20, 2010 09:01 ET (13:01 GMT)

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here is my view
GU above strong flip area and I should be careful taking shorts at least close inside the flip area will give some comfort to open shorts.

The Pound Will Be More Resilient Now
By NICHOLAS HASTINGS
A DOW JONES NEWSWIRES COLUMN


LONDON -- Another rally up towards $1.60 is unlikely, but sterling will prove a much more resilient currency than initially expected.



Not only is the U.K. economy in better shape to withstand the fiscal austerity storm that is about to break over its head, but continued investment fears of a sovereign default across the channel and a lack of confidence in the U.S. recovery means that the euro and the dollar are even less attractive alternatives.



Sterling bulls had long assumed the post-election party for the pound was over.



The pound had bounced all the way from nearly $1.40 to nearly $1.60 as the new coalition government led by the Conservatives promised a reduction in the massive budget deficit that threatened to undermine the country's first-class credit rating.



However, draconian public sector spending cuts and the higher taxes announced in the emergency budget in June soon injected some economic reality.



By early August, buyers were losing their appetite for the pound as the prospect of prolonged austerity brought speculation that the Bank of England would have to extend quantitative easing.



This week has proved, though, that those fears both about the economy and about early quantitative easing were overdone.

By William L. Watts
A DOW JONES COLUMN


Risk on. Risk off. The binary paradigm that's called the tune in financial markets since the Lehman crisis shows little sign of fading away soon.

HSBC's currency research team took a close look at the relationships between asset classes over the last 20 years, coming to the unsurprising conclusion that correlations have intensified significantly since the start of the credit crisis.

Terms such as "risk rally" and the shorthand "risk on" and "risk off" caused consternation last summer, with some market mavens complaining the terms carried little meaning. After all, wouldn't any rally in most assets other than high-grade government bonds constitute a risk rally?

But the phenomenon has proven persistent and has made life more difficult for traders and investors seeking relative value within or among asset classes.

That's because when the market perceives risk is "on," equities, credit and high-yielding currencies all tend to rally. When risk is "off," those assets fall and government bonds and safe-haven currencies, including the U.S. dollar, the Swiss franc and, in particular, the Japanese yen rally.

In currencies, that means weak U.S. or Japanese data can spur gains for the dollar or yen as investors flee risky assets for safe havens.

HSBC's research, which looked at correlation between a range of financial instruments over the last two decades, found that high correlations have tended to accompany high levels of volatility and vice versa. But correlations have remained high in recent months even as volatility declined, suggesting that a structural change is taking place in the markets, the research found.

In fact, correlations are the strongest they have been at any time over the past 20 years, according to HSBC. And a "correlation index" put together by the researchers shows a clear upward trend over that period.

That backs up the idea that the trend is being driven by structural changes in the markets, perhaps tied to growing internationalization of markets and financial products, as well as technological advances that allow financial information to be more rapidly disseminated around the world, the research found.

Rising correlations are also tied to weak macroeconomic conditions, the research found.

Economic weakness usually means monetary easing. That makes for bond market gains followed eventually by a recovery in equities. Stocks and bonds move together for a while, boosting correlations.

At the same time, low yields encourage carry trades, in which investors borrow in the low-yielding currency and buy higher-yielding assets. As a result, higher-yielding bonds move in the same direction as bonds and equities--a phenomenon that may be "particularly extreme" right now given interest rates sitting near zero in the U.S., Japan and Europe, HSBC noted.

A weakening of the risk-on/risk-off paradigm is unlikely until macroeconomic conditions show a sustainable improvement, the research found, warning that even when it does begin to fade, correlations are unlikely to fall back to precrisis levels.

For foreign exchange, the research indicates risk appetite will continue to drive trade. That means currencies outside the G4--the dollar, euro, yen and U.K. pound--will continue to be dominated by the performance of global asset markets and that whipsaw shifts in market sentiment will continue to make for high volatility.

(William L. Watts writes for MarketWatch. He can be reached at 415-439-6400; [email protected].)

Click here to go to Dow Jones NewsPlus, a web front page of today's most important business and market news, analysis and commentary: http://www.djnewsplus.com/access/al?...V3lneWag%3D%3D. You can use this link on the day this article is published and the following day.

(END) Dow Jones Newswires

August 20, 2010 07:50 ET (11:50 GMT)

Copyright (c) 2010 Dow Jones & Company, Inc.

by the way on lower time frames we are currently over sold

i will look forward to fresh short entries from 1 hour 200 ema, not here

that day when Grashid ask me for doing trends, UJ I add the lowest it can reach I dont remember my setup but I expect a good turning / retrace with no more fall for this pair. maybe yea we back now to 88.**
http://www.forexfactory.com/attachme...2&d=1279164607

now GJ free to long if it will.
happy weekend

Hi all,
If my Ew count valid, she should not close below the Grey LTL and will going for C IMHO.
Cheer

u sure ur kid will treat you like that?????

One who laughs last laughs the best...

Lets see...LION..

hey i am not laughing at you or your trades

remember that always

by the way, we will probably see 5300 levels next week

i remember an interview with Marc Faber on markets, something on June n July trends

find it, watch it, it was on CNN

I know...I am joking as well..

See .. The resistence levels I have got from Fibs on different TFs are ..

1.5415 first ( perfect place for long..as per symmetry+ wave structure)

1.5367.. This should be a strong Bounce area into 1.58xx

Last one 1.5315.. that is a 38.2% retrace of the whole move from 1.42xx - 1.60

If it bounces from current low 1.5460.. we can go to 1.58xx

One thing to keep in Mind..current trend is UP... Untill 1.4770.

Going Against the trend is not a wise thing to Do...specially when Daily is showing Oversold Levels...or should I say Divergence.

I am still waiting for swing at all those above mentioned #s.. With SL below 1.51xx

u reminded me of my secret weapon

by the way look where we are currently

previous wave top

http://img266.imageshack.us/img266/1277/42861925.gif

secret news weapon?

No those are HIS programmed indicators....IMO..

oh, i see..

GU

I don't have a lot to say as its very confusing price place
well, I think short not proffered before price close below 1.5470 other we still holding in the long side;
price now around strong reverse area and maybe in long term we see double top on the weekly as explained in the img.

my view for EU may help a bit, there a important channel on weekly and price respect it at last week low so long is my holding option until EU break the channel or close below 1.2668 and GU H4 close below 1.5470


------------------------

GJ

Again above the daily LTL and here is my major reverse levels on H4

comparing GJ with EJ I think but I'm not sure how it will reflect in GJ, EJ may have more drop to touch the monthly trend and maybe GJ will follow this move and from there the swings start for north targets.

----------------------
*Thanks Raza for the vouch

Hello Every one ,,
Am new Here And I Have A Question That I Really Hope Some One Have The Answer As I Searched Alot And Got Nothing ,,
The Volatility Of The Gj Is Soo Low This days As we can see some days it only moved around 60 pips or something !
that's something i can't trade with unfortunately but i don't know when it should return to it's high volatility like when it used to move around 250-350 pips less or more that's how i want to trade ,,
any hopes that it will be soon or any thing to read or search to understand when it should get back ??
and thanks

My trade plan for next week : I will look for longs until the lower trendline breaks and target the upper trendline.