Huge swings in EURJPY & GBPJPY

The 200 pt swings in forex these 2 days have been breathtaking.

I have observed that the Asian trading sessions do tend to extend the sentiments from the US close the previous night.

Take the overnight NY session for example, following the IMF saying that total toxic assets might hit USD 4 trn earlier in the day and Alcoa's poorer than expected Q1 earnings after the close compounding investor sentiment, Dow futures and higher yielding currencies declined.

Then Sydney, Tokyo and Spore opened a few hours later, picked up the ball and kept it rolling in the same direction. Stocks were sold, and crosses like EURJPY and GBPJPY, classic barometers of risk taking, fell about 280 points from high to low. (see chart)

Hang Seng, following the Dow's 2.34% decline, tumbled 3% and Nikkei about 2%.

This momentum from the NY to asia trade is actually good for traders who are willing to leave their positions to tag along the 'flow'.

When London came in, there seems to be a magical calm settling into the market. Stock futures recovered in positive territory, and EURJPY & GBPJPY bounced up at least 200 pts from their lows.

The moves are pretty sweet, and when you sense that the market may be oversold, taking the opposite position can be rather rewarding.