Early last week I wrote about a very successful macro trader who has a proprietary technical trading model. He anticipates USD/JPY falling towards 75 in the coming months. His GBP/JPY analysis was even more bearish, in fact it seemed so outlandish that I don’t think I even mentioned it. Perhaps I shouldn’t have been so quick to judge. 

However we may argue with the fundamental outlook, there are still some very credible people in the market who can see big moves happening and we should take their views/analysis into account when taking our trading decisions.

On the day, I prefer the sell-rally strategy and I consider any levels towards 89.80 to be decent entry points.

That would equate with the cable being below 1.5340 and USD/JPY below 89.50, which would mean that both ‘legs’ of the cross would have broken their support levels. If Europe carry on with this ‘risk aversion’ then these stops in GBP/JPY will certainly be in view as of course will be the 120.00 level in EUR/JPY.

The cable rally has accelerated, stops above 1.6250 having been tripped, and we’ve been to session high 1.6275, presently back at 1.6265.

Strong GBP/JPY buying has been noted, with decent demand from UK clearers and Middle Eastern names. The cross is presently up at 146.90 from an early 146.20.

Elsewhere USD/JPY has been as high as 90.50, running into aforementioned sell orders at 90.40/60 and has eased back to 90.35 at writing.

Cable has rallied back above 1.60, presently at 1.6015 having been as high as 1.6028.

In an interview with Dow Jones Goldman’s Jim O’Neil has said one of his favourite trades for 2010 is to buy GBP/JPY.

He feels concerns over UK and US sovereign credit ratings are overdone.

It has been well-documented that Mr O’Neil isn’t a big fan of the yen.

GBP/JPY trades up at 147.65 from an early 146.95.

After the initial USDJPY and EURJPY selling seen earlier this morning, Yen crosses have now been sold across the board. AUDJPY has been forced lower with AUD back towards support and GBPJPY back 50 pips towards 149.40. There were many times last year when the first move in Tokyo was always the wrong move…. will 2010 be any different?

In any case, crosses will be under pressure this morning in Asia, with EURJPY back below support forcing EUR back below 1.4300. Look for 1.4270 support, under that and its back to the 200 day MA(1.4229) that we were talking about last week.

All I can glean so far is that a fairly sizeable EUR/GBP buy order went through the market in late Asia and as the markets are already quite thin, it caused the pound to lose ground against all the majors. GBP/JPY is currently testing the support points I mentioned earlier at 145.35/45; next technical support in the cable is at 1.6315 and technical resistance in EUR/GBP is the top of a bullish hourly trend channel, now around .9075.

GBP has been sold off over the last hour down thru 1.6550 support and triggering some stops in the process. Technically it survived the bearish reversal formation, however with Late US names still seen selling, it feels there is still some room lower back to 1.6400. Some support from early Japanese players via the GBPJPY which may keep it above 145.80 and 1.6500 for the morning session.

The One Hour Chart of GBP/JPY show that it still bearish in GBP/JPY

anyone agree?

Cable is already 40 pips lower on the session, currently trading at 1.6495 after the latest comments on UK GDP. GBP/JPY has also fallen but USD/JPY support at 86.30 is holding firm thus far.

Cable is struggling this morning, presently down at 1.6610. It’s not being helped by action in GBP/JPY, where Japanese accounts are said to be selling aggressively. The cross is down at 147.55 from an early 148.15.

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