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Dow fell into EOM as expected so monday’s action
should be interesting as we kick off February.Never give up, never surrender.
I closed all positions on friday to give me
a clean sheet and my next trade will be a
small long as we test Dow support.Never give up, never surrender.
Having January options expire on the up tick it
was not hard to imagine the option writers
wanting to depress prices into EOM.It is just possible we rally monday as new
money enters the market.My work suggests the end of next week is weak
regardless of where we get early in the week.Dow 28000 – 29000 next week is on the cards.
Never give up, never surrender.
GBPUSD as requested: here’s my original chart from June 2019 which suggested GBPUSD in a falling wedge extreme long term. The recent ‘five up’ might be an expanded ‘B’ wave for the middle action of the last leg down… or it might be something else.
Brexit has happened. Now comes the long hard slog to negotiate trade agreements etc. Given that England hardly manufactures anything nowadays, it might be the case that a lower Pound is required in order to boost exports (and limit imports). Certainly a lower Pound would put Boris in a better position for negotiation. And if the UK can’t get the agreement terms it wants, well a 10% lower currency puts it back in a strong position.
Shorter term I can’t make out a pattern (except the upwards five). It might be a case of ‘better to travel’.
GBPEUR: same long term pattern (original chart). It has bounced and might now decline to around par 1:1. Not certain about that… but it is the obvious route from the chart.
GBPEUR: an updated chart. It still *looks like* what we’ve seen recently is part of a final wave (b) leading eventually to a test of parity 1:1.
What’s very interesting about this final move is as follows: wave (a) down from 1.44 to around 1.10 was 0.34. If we take 0.618 of that for a final (c) wave we get 0.21. The Brexit rally stalled at 1.21 (!). So if we deduct 0.21 from 1.21 we get … 1.00 (!).
Whether this is coincidence or not remains to be seen. But for the moment I have to assume that 1.21 is the (b) wave rally peak and we are now embarking on a route to parity.
Today (apparently) Boris has announced that he’s going to take a ‘hard line’ on trade negotiations. Whether that’s just an opening gambit (which I suspect it is) or something more serious remains to be seen.
So for the moment the target is 1:1 sometime over the next year or two. After that (and once the UK has sorted itself out, settled trade etc) the Pound should rally all the way back to about 1.40.
I intend to transfer my savings into Pounds if/when it gets near to 1:1.
USDVND: In 1988 the Vietnam Dong was parity 1:1 with the USD. In order to get the economy motoring (and to gain international competitiveness) Vietnam devalued its currency several times. Today the exchange rate is (wait for it) $1 = 24,000VND (yes, twenty four thousand).
I was very surprised at how inexpensive most things are in Vietnam. Too cheap. The Country is now successful, is expanding, and has amongst the highest GDP growth in Asia. Many foreign companies have opened factories there (Nike, Samsung) and the IT Industry is growing.
It seems to me that in the long term the VND is massively undervalued. Looking at prices I paid, the currency could easily double and everything would still be dirt cheap.
It is possible to buy a beautiful two or three bed brand new modern beach front apartment in Da Nang or Nha Trang for $200,000. Too cheap.
I am now researching how to put some of my savings into VND on a ten year view. I’ll see what my local and international banks can do (probably nothing). Otherwise I’ll go back to Vietnam and open a bank account. Current interest rate is around 5%. Frankly, getting 5% per annum in a currency possibly 50% or more undervalued is an opportunity that I don’t think I should overlook.
I think devaluing the pound is a good idea and even
if not done by choice, it will still happen.Never give up, never surrender.
Central banks are playing King Canute and when
not they are playing The Emperor’s New Clothes,
as their role models of choice.Another Credit Crunch looms into view.
Never give up, never surrender.
Odd answer from my work is the bull controls Dow futures
and the bear controls Dow cash.I will see how that plays out and review it at mid week.
I will try and trade that but with great care.
Never give up, never surrender.
Markets may feed off news like this …
…
China is to pump a net 150 billion yuan ($22bn – £16.3bn)
into its economy on Monday to help protect it from the
impact of the coronavirus outbreak.China’s central bank said the move would ensure there
was enough liquidity in the banking system.
…
US President Donald Trump is set to be acquitted in his
impeachment trial after senators voted against calling
witnesses or admitting new evidence.
…Never give up, never surrender.
Dow futures hit 28500
Dow cash has exceeded that price.
We ‘could’ be headed for a gap close in cash and futures
which would be the latter above 28900 … yer ha !Never give up, never surrender.
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