Since BREXIT as you all know I was bullish on the GBP. I believed it had no negative economic impact. 6 months later We can confirm that on an economic level that was the correct call. Bought at 1.30 1.29 and 1.28 levels toke a nice ride twice to 1.35ish area sold some on the way up and than the wonderful flash crash. Remained bullish at 1.21 and took a nice little ride back up to 1.28 and made all our money back from the flash crash. Despite the strength in the dollar. Which most thought I was crazy for going against the all mighty King Dollar. Then I turned bearish at the 1.26 area. Not because the UK Economy sucks, but rather because of the strong dollar as I mentioned many times. Since we have taken a nice little ride back down to the 1.21 area for a 500 pip move. Despite the mishaps we have managed the trade to a very nice profit over the last 6 months. As the facts changed so did we.
This is proper “mental game” folks. Not! Fuck it! I will hold it till 1.40 with fake money because the UK economy is great and I can not accept I am wrong because I am a WINNER! ALL PROFIT YOU MAGGOTS!
The question now is should we reverse and go long? There is good evidence to make valid arguments for long and the short side. We are very accustomed to seeing these 500, 600, 700, pips move in the sterling. Twice from 1.30 area up to 1.35 and twice from 1.28 to 1.21 and vice versa. Repetitive pattern no doubt. UK economy is fine, thus it would not be be unreasonable to stick with that pattern and go long.
On the other side of the coin, the dollar continues to kick ass all over the place. I do not believe the move is over. Second, The EUR has devalued as well. Since BREXIT the GBP has lead the move lower followed by the EUR a few weeks later. See chart 2. This is also a repetitive pattern which indicates that the dollar move higher is not over yet. I could be wrong but the EUR should follow the GBP lower in a couple of weeks time. I believe this is the more likely scenario occur. We will probably see Flash crash lows in the near future. Which is why I have repeatably said Short all rallies against the dollar. Which has been the correct move. I will be more inclined to buy the GBP under two circumstances.
- DXY hits 107
- Flash crash lows have been tested.
Of course depending with the data looks like then.