Rebirth of the Capital Legend

Chapter 272: Positive news driving the market!

In Godfrey's view, the current stage.

The bearish analysis reports on the pound exchange rate released by a number of institutions including Citigroup, Blackstone Group, and BNY Mellon, as well as the bearish logic proposed by institutions such as Huayi Capital, Aberdeen Asset Management, and Huayin International, are all not supported by actual data and are extremely one-sided.

Regardless of the perspective of British national interests or the actual practices of the Bank of England.

The result of the UK's referendum to leave the EU and the continued appreciation trend of the pound sterling exchange rate cannot be surprising.

What's more, the current exchange rate of the British pound is at the bottom in the past fifteen years, slightly lower than the exchange rate performance during the financial crisis in 08.

Such a low level, coupled with the market's clear bullish expectations.

It was difficult for him to understand the short-selling behavior of the bears at this position. At the same time, he was extremely firm in his belief that it was impossible for the bears to continue to suppress the pound exchange rate, or even trigger an extreme short-selling market, causing the longs in the market to stampede and close their positions.

Therefore, after various aspects of analysis and underlying logic verification.

He was more determined to continue increasing his long positions and firmly go long on the pound sterling exchange rate, prompting a number of traders in the trading room to continue to increase their long positions on the pound sterling exchange rate.

And almost at the same time.

As a firm bullish force in the market.

Tokyo Nomura Bank Investment Department, Hong Kong Hashimoto Asset Investment Department, Hong Kong Pilot Capital Investment Department...

In the trading rooms of various institutional main funds, a number of traders continued to increase their long positions when the pound exchange rate fluctuated and fell to the intraday low.

However, in the Asia-Pacific region, a number of major long institutions in the market have increased their holdings.

It did not easily reverse the short-term trend of the pound sterling exchange rate.

At this time, in the entire pound exchange rate market, the long-to-short behavior of major institutions such as "Citibank", "BoNNY Mellon", and "Blackstone Group", as well as the bearish market analysis reports released by various short-selling institutions, and the short-selling major institutions in the market such as "Huayi Capital", "Huayin International", and "Aberdeen Asset", continue to release short-selling information to the market, which still deeply affects the market's long and short sentiments.

It is still causing many long retail investors and hot money in the market to waver in confidence and cover their positions.

At the same time, it is also attracting more other funds to follow suit and enter the market to short sell.

It is in this situation that the short-selling force and short-selling sentiment temporarily occupy the dominant low level.

At 10 am, the pound sterling exchange rate broke through the 1.5300 mark as the volume continued to expand, and instantly fell to yesterday's low of 1.5270.

At 11:45 am, the pound sterling exchange rate continued to fall, and its exchange rate hit a recent low of 1.5250.

At 2:30 p.m., the pound sterling exchange rate hit a daily low of 1.5239.

However, the pound sterling exchange rate continued to fall in the Asian session, and when the market entered the more intense European session, it began to rebound.

After the bulls suffered a brief defeat in the Asian session.

A crazy counterattack was launched during the European trading session.

"After major market makers and exchanges around the world have significantly increased the margin ratio for standard contract transactions on the pound exchange rate, it seems that this has not curbed the trading and speculation enthusiasm of global funds in the pound exchange rate market." At 5 pm Yanjing time, that is, the beginning of the European session, in London, at the hedge fund trading department of Barclays Bank's 'Lion International', fund manager Claude stared at the trend of the pound exchange rate and sighed, "The long and short positions in the market are still increasing, but the net long position has begun to decrease, which is a bit surprising."

"It's not just the pound exchange rate market where speculative enthusiasm is rising sharply," said Alex, head of the market research department at the fund trading department. "At this stage, the long and short positions in the euro, US dollar index, and gold spot markets are all rising rapidly, and the speculative nature of these markets is also rising rapidly."

Claude nodded slightly and said with a smile, "That's understandable. The result of the referendum on June 6 next week will have a profound impact on the global economy and global financial markets. It would be strange if the speculative enthusiasm in the financial market did not increase for such a historic event. And it is foreseeable that as June 23 approaches, the intensity of market transactions will probably intensify further."

"The long and short positions in the pound exchange rate market have exceeded 200 million lots," Alex said. "It's a historic moment."

"Risks and profits go hand in hand," Claude said. "With such a huge amount of long and short positions in the market, there will inevitably be extreme market fluctuations. On June 6, it is estimated that many people in the financial market will be liquidated, and many people will also make huge profits."

"Indeed." Alex nodded and continued, "Mr. Claude, are you still cautious about the referendum result on the 23rd and the direction of the pound exchange rate market? I heard that according to the preliminary estimate of the government agency, the referendum result is more than 90% likely to be in favor of everyone accepting to continue to stay in the EU. In our city of London, about 70% of people will agree that the country will continue to stay in the EU system.

in my opinion……

The reason why the cabinet passed this referendum resolution is to propose a national referendum on Brexit.

The purpose is not to really leave the EU, but to negotiate terms with our other major neighbors in the EU system to reduce the amount and pressure of our financial support in previous years. "

"I also believe that the cabinet's real purpose in passing this referendum is to negotiate terms with EU countries," Claude said. "But once this process is started, no one can firmly believe that there will be no surprises before the final result comes out. I am now worried that these people in the government will accidentally go too far. You know, the population of our country is not just those in London. According to current news, it seems that people in Scotland are very keen on leaving the EU."

"It shouldn't be a big deal, right?" Alex said, "This is a motion led by the Prime Minister, so any unexpected situations should be within our expectations."

"It's hard to say." Claude smiled and said, "Any 'black swan' event seems impossible before it happens, but... no matter what the referendum result is, our agency's long position in the pound exchange rate market can no longer be held."

"Mr. Claude wants to completely liquidate his long position in 'Lion International'?" Alex said in surprise.

He remembered that about half a month ago, Claude was still firmly bullish on the pound exchange rate and believed that the country's economy had reached a critical moment when it was expected to improve.

At the same time, it is also believed that the central bank’s aggressive monetary policy will bring a significant boost to the foreign exchange market.

But I didn't expect...

Claude: In today's market, the vast majority of European capital is bullish on the pound exchange rate and believes that the referendum on June 6 is just a drama directed and performed by government cabinet members to gain more interests within the EU system. He actually chose to liquidate the long positions held by the main hedge fund products.

Claude responded: "A few years ago, when I was traveling in China, I heard a saying, 'A gentleman does not stand under a dangerous wall.'

Now, in my opinion...there is such a huge amount of long and short positions in the pound exchange rate market, and such high speculative sentiment.

That is a dangerous wall.

The current pound exchange rate market is like a huge powder keg, and the referendum result on the 23rd of next week will be the fuse that detonates this huge powder keg.

Even, it cannot be said to be the result of a referendum.

As long as market expectations change drastically in an instant, or expectations about the referendum outcome suddenly evolve towards a result in favor of Brexit.

Then, extreme market fluctuations will inevitably occur in the pound exchange rate market.

Although judging from the various news and sentiment feedback in the current market, the expectations and predictions for the referendum results tend to favor continuing to stay in the EU, with a probability of up to 90%.

But what if the results are unexpected?

It is very likely that our institution’s current huge long position will be liquidated by the short sellers without even time to stop loss and cover the position.

This kind of market fluctuation with highly speculative nature is suitable for gamblers but not for investors.

If you hold a large number of long positions and stay in the market, you may reap huge profits, but you may also lose all your capital.

There is no shortage of gamblers and speculators in the foreign exchange market, but I am not such a gambler or speculator, so... I have no choice but to stop gambling."

Previously, the volume of long and short positions in the pound exchange rate market was not so exaggerated.

Moreover, the market's expected direction at that time was completely different from what it is now.

Originally, he planned to hold the large number of long positions in the fund products until June 6 to see the referendum results.

But now...

Faced with the continued surge in long and short positions in the market.

Faced with the continued rise in market speculation.

He knew that if he made a wrong judgment, he would most likely not be able to stop the loss, so he was unwilling to continue gambling.

In addition, his many years of experience in financial market investment and last year's "Swiss franc black swan" incident have left him with some vigilance, making him unwilling to gamble on such high-risk things.

Of course, the collective shift from bullish to bearish by a number of US-funded institutions including Citigroup, BNY Mellon, Blackstone Group and Aberdeen Asset Management also made him wary. After all, although the logic of these institutions' bearish reports was not quite right, they were not completely without reference value.

Thinking about this, Claude didn't wait for Alex to respond.

He then turned around and issued trading instructions to all the traders in the trading room to cover their profits and liquidate their long positions.

Along with traders, trading instructions continue to be executed.

Due to the large-scale covering and closing of positions by the main long fund in the market, 'Lion International', the pound exchange rate, which had been rising continuously and had formed a rebound trend, was suppressed again, causing the 1.5300 point position to be lost and regained, and it could not stand firm.

"Why is the pressure on the 1.5300 level increasing?"

At 6:1.5300 p.m. Yanjing time, during the European trading session, Andrea's hedge fund trading room at the investment department of UBS International in London noticed that the pound sterling exchange rate was fluctuating violently around and could not hold steady. Fund manager Andrea frowned instantly.

"Today, short positions in the market are increasing rapidly, while net long positions are decreasing sharply." Enid, the head of market analysis at the 'Andrea' hedge fund, responded, "This shows that the short force in the market is increasing, while the long force is covering. The increase and decrease naturally increase the upward pressure on the pound exchange rate."

"It seems that the bearish reports released by a number of US-funded institutions to the market last night still have a great impact." Andrea said, "If the 1.5300 point barrier cannot be overcome, the confidence of the bulls in the market will probably be quite bad. Moreover, in the US trading stage, with the increase in the positions of a number of short-selling US-funded institutions, the trend of the pound exchange rate will be even more pessimistic. Alas... In the past few days, when market expectations were fully tilted towards bulls, we should have been more aggressive and directly pulled the exchange rate above 1.5500 points."

"In the current pound exchange rate market, the expected direction is still biased towards the long side." Enid said, "and according to our information, 'Huifeng Bank' and the Bank of England should still be increasing their long positions in the pound exchange rate and conducting corresponding market operations."

"Apart from market news, is there any other positive driving information?" Andrea asked.

Enid thought for a moment but hadn't answered yet. At this moment, the door of the trading room was pushed open, and Evangeline, the core market intelligence officer of the investment department, walked in and hurriedly reported: "According to our latest news, the Prime Minister will meet with French and German politicians in a private manner this weekend to further discuss the issue of staying in the EU and leaving the EU. The President of the European Union will also be there."

“That’s great news,” Enid said.

"It seems... many of the market's concerns and the deliberate exaggeration of the bears are all for self-help." Upon hearing the news, Andrea's eyes instantly became sharp, and she quickly turned around and instructed the traders, "Go long, increase long positions immediately, and push up the pound exchange rate. The positive expectations brought by this news will soon ferment in the market. If we increase long positions at this time, we will soon be able to reap some profits.

at the same time……"

She paused, then quickly turned her head and said to Enid, "The news has undergone a huge change, so we must also keep up with the emotional trend. We should use the influence of our organization to issue a bullish report to the market and attract more bullish funds to come in. With the influence of these factors, we may be able to push the main bears in the market to the edge of the cliff today.

Then, take advantage of the emotions and news fermentation over the next two days of the weekend.

Perhaps, before the referendum on June 6 arrives, the main short sellers in the market will trample on each other, triggering a continuous extreme short squeeze trend. "

"Okay." Enid responded quickly and left the trading room.

Then, under Andrea's command, and with the continued increase in long positions of the entire 'UBS Andrea' hedge fund...

Almost instantly.

The pound sterling exchange rate soared straight away, breaking through the 1.5300 mark again. In 5 minutes, it surged more than 50 points and returned to its intraday high.

(End of this chapter)