The talk of extension is now in the open so priced in.
The little spike on GBP up this evening reflects the talk of the ‘backstop’ not be time limited.
This was actually mentioned yesterday between UK and Ireland heads of govt but only being picked up 3hrs ago by Bloomberg - I’d remain cautious on selling GBP.
Edit: If a trader wishes to get an up to date sense of Brexit from the EU perspective this is maybe the best source - note the reference to time limit reported yesterday and in the market today via Bloomberg.
Think I’ll bring my participation on this to a close.
Reasonable chance of GBP buying early in the week ahead.
Also a reasonable chance that’s it a blimp - the extension period has been accepted by UK but a rider has been applied.
The 27 have to drop the notion of a backstop on the land border issue (island of Ireland).
The bad news is that the 27 have anticipated this move, they see it as yet another attempt to isolate Ireland from the remaining 26, divide and conquer has been mentioned.
Having said that there is much anxiety in Dublin right now, the larger players are on side but not sure how the East will react.
This post is a hindsight one so of little consequence save for thinking about algos and orders.
There are many algos in the market, and it seems that with each currency they have a particular behavior pattern - I’ve noticed over the years that cable (or GBP) has a streak of going against FA for maybe one or two days and then - take it up to sell or down to buy.
Oft times the levels will give a clue, the blimp on Tue didn’t reach the level 3050 - maybe because there were bank buys there (as a precaution against a deal announcement) - so that level was ‘protected’ - (pull the sells on a deal).
It’s just a thought, anyways with the hindsight that comes sometimes with ‘PA’ or ‘TA’ here is the Tuesday blimp:
And finally, where do retail enter short, mostly guys will wait - just in case.
All the trend lines and fancy PA/TA look good, but where to get in?
Always the levels, follow the levels, 3050 wasn’t reached, the arrow was when the US came to the table, but retail must never chase, wait…
Next day, just as on Tuesday the mid Asian was kick off for higher (blimp) so Wednesday mid Asian was kick off (2980) for lower.
What’s the biggie about the mid Asian?
It’s just a level, and has a little history.
Back in the day - see the little reuters pager - it’s showing the Asian hi/low:
Edit: no computers, no mobile phones, no calculators, just a smoke and figure out where is the mid level between two numbers - that’s how ‘smart’ the algos are today.
Week now closing - there has been a marked turnaround on GBP.
The catalyst was a letter from the Brexit Secretary dated over a week ago which references Nov 21st and implies that a deal will be announced by that date.
The latest negotiations are in the “tunnel” so there are no leaks. Leaks have helped unravel discussions in the past.
The UK PM’s office issued a statement later in the day to describe the Nov 21st date as “speculation”.
The market reacted on the letter release immediately and continued so over the next 2 days. The suspicion that the date idea is correct and was released unintentionally persists, although there is zero evidence - but then there is the tunnel.
The reaction also triggered a squeeze on the shorts - for learners a squeeze is often painful and often affects those who didn’t take their profits when offered - always think about the profit.
Anyways, the future - for longer term it’s a good thing, reaction to a deal will be more muted now. Guys who went long GBP mid week will be likely thinking about some short term profit today.
I see a double top on hrly forming so will be watched.
That’s all in the past, as always the learning curve lies to the right of the chart.
The market expects that the new Iron Lady will win any leadership contest that may arise, expect a dip in Gbp if the 48 letters actually materialize, expectation is that the numbers are short.
Then next week likely a consolidation on Gbp, that up arrow at 2700 has some value if a dip does happen.
The market is more focused on the Westminister voting numbers, therein lies the outcome - that is for the next post.
This is the second time her best people have resigned from her “solution” !
WE voted to “GET OUT” - there were no caveats or “need for agreement” !
Just FDI !
The parliametary career politicians do NOT have the support of the Country - who cares what the international traders value the Pound at ? That will all come right in the fullness of time.
WHat do YOU think to the proposal that we should cut the whole of Ireland adrift and put a border down the “Irish sea” ?
It May be correct that no-one else wants to get involved at this stage - it is potentially a “Career buster” - but please do not even think of this woman in the same breath as “MAGGIE” !
Falstaff is absolutely correct - the majority in N.Ireland voted to remain within the EU, but their wishes are superseded by the vote in England.
Irish GDP per c is second only to one country in the world - Switzerland:
Not sure what FDI means.
The reference to ‘Maggie’ is likely to Margaret Thatcher, former UK PM and leader of UK Tory party, was ousted by her own party - over the EU.
The UK region that extracts the most from the UK Treasury, i.e that puts the least in but takes the most out is…the same region that Falstaff vaguely refers, not Ireland but Northern Ireland
[quote=“Falstaff, post:197, topic:84071”]
WHat do YOU think to the proposal that we should cut the whole of Ireland adrift and put a border down the “Irish sea” ? [/quote]
Interesting - I have said for many years that he best solution to the “Irish problem” would be to cut the the rope and let them drift out into the Altantic
So if you agree what the hell is YOUR “iron Lady” doing trying to keep DUP onside ?
This is a huge problem for most my colleagues in UK, they figure that DUP means Ireland.
Truth is that Ireland doesn’t want a rope, it’s a noose, not a life line, our outlook is worldwide, has been, thus the GDP.
I admire May because finally she has stood up to bullying, it takes a while but bullies need to be stood up to. She made a huge mistake by trying to pay the bully off with £1bn, thankfully the PM didn’t pay them up front, she kept half.
What next? - the bully will huff and puff, that’s what they do, hopefully the new Iron Lady will stick to her guns.
Cut us adrift?
Sometime come over to our little island, we have a saying: “cead mile failte”.
Ok, apologies for the side track, I wanted to focus on GBP price and in particular that double top that I felt was of importance back 2 weeks ago.
Back 3 weeks (Oct 27) I suggested maybe ease up on Gbp sells, it so happened that Oct 30 was a turning point (have mentioned EOM before)
So what about the DT? - well that formed at the end of the following week - the market seemed to be poised for more selling and so guys sold.
Never take a position on a Friday signal, it’s often a spoof.
Of course the market (the algos both fa and ta) took note of the DT (my reference “will be watched”), it became the formation of a well known pattern, the infamous head and shoulders.
Check the yellow line on the chart below the Iron Lady - TA and FA working in perfect harmony.
One other little point of learning - can you predict these moves?
Answer is no, but it’s possible to learn how to imagine them.
Always an example - look again at the Iron Lady chart and notice the grey line - where price is right now.
Is it possible to see that the market is waiting, almost undecided, the news algos are in blinking mode, likely Tue/Wed for the next move, I suspect reasonably positive Gbp, they have their eyes focused on a certain lady made of Iron
Edit: Blinking mode - Msdos on a computer has a cursor, looks like an underscore, sits blinking waiting on input.
Going to give little updates on the Brexit scenario, the focus will be on the trading aspect and not the politics.
On this thread Brexit Parliament vote I had suggested that last Friday was the day to take up a sell position on GBP.
I will explain the reasoning, how it is possible to anticipate news effect on price one week ahead.
Learners will often read that the fundamentals or ‘news’ is always already priced, if that were so then I couldn’t have reasoned that there would be a sizeable move early this week.
Early in the Brexit process the UK govt wanted to have control over all decisions, this was rejected by a majority of lawmakers and it was agreed that Parliament would have what was termed a “meaningful vote” on any proposed Brexit agreement.
The UK govt reached an agreement with the EU27, when announced it caused some GBP buying, although the market was aware of the meaningful vote yet to come.
Market sense was that the EU would ratify the agreement, which it did, but as time went on it was clear that parliament would not, the numbers simply did not stack.
The vote was set for today and the market was poised for the inevitable outcome.
The only unknown variable last week was NFP and it’s effect on the USD side of cable, when that would become clear then GBP would be the focus.
