Rebirth of the Capital Legend

Chapter 273 Bulls counterattack under favorable impact!

"What the hell, what's going on? Why did it suddenly surge?"

Seeing the pound sterling exchange rate soar suddenly and return to the 1.5300 mark, and the trading volume rapidly increasing, Gerald, the head of the trading team who had been paying attention to the changes in the pound sterling exchange rate in the trading room of 'Huifeng Global Asset Management Universal Hedge Fund' in Hong Kong, was surprised.

"Will there be any benefits to this unusual situation?"

Next to Gerald, trader Gene said.

"It's possible." Gerald thought for a moment and responded, "But at this time...what kind of favorable incentives will there be?"

Just as he was wondering, the door of the trading room was pushed open, and Ernest, the head of market research at the fund trading department, walked in. He reported to Godfrey, the manager of the Universal Hedge Fund, with a look of surprise on his face: "Mr. Godfrey, the latest market news is that German and French politicians will visit the UK in a private manner this weekend and will have dinner with the British Prime Minister and the Minister of Finance. It is estimated that they are here for the referendum on Brexit on June 6."

"Really?" Godfrey smiled. "This is great news for us and all the bulls in the pound exchange rate market."

"The itinerary has been confirmed," Ernest replied. "It won't be fake."

Godfrey nodded slightly and said, "Looking at the market trend, it can't be fake news."

"It seems that the referendum result on June 6 next week is basically determined to be bullish, right?" Gerald said, "And at this weekend's meeting, it seems that Germany and France will take the initiative and most likely offer more favorable conditions for Britain to continue to stay in the EU."

Godfrey responded with a smile: "This is completely expected. As long as the weekend meeting reveals any positive news, it will greatly boost the bullish sentiment in the pound exchange rate market."

"It should be more than just a boost to sentiment," Gerald said. "If the talks go well, it will also greatly boost the future economic recovery of the UK. At the same time, it also clearly releases the expected bias of the referendum result next week, providing underlying logical support for the bullish attack in the market."

"The pound exchange rate has climbed to 1.5360," Gene reported immediately.

"It seems that the main long institutions in the market are taking action." Godfrey smiled, turned his eyes to Gerald, and ordered, "Continue to go long. Under the stimulation of favorable factors, the main short institutions in the market should be powerless at this time. As long as the pound exchange rate once again crosses the 1.5400 point mark, the confidence and confidence of the short positions in the market will undoubtedly... collapse again."

"Okay." Gerald nodded quickly in response.

Then, he instructed the traders to continue to increase their long positions in the pound exchange rate to help the pound exchange rate continue to break upward.

And at the same time...

As related news further fermented.

The main long institutions in the market, such as 'Pacific Capital', 'UBS International', 'Nomura Bank', etc., also launched a counterattack against the shorts in an instant.

And when these main long institutions take advantage of changes in news to strongly fight back against the shorts.

The main short-selling institutions in the market, mainly Huayi Capital, Huayin International, Aberdeen Asset Management and other institutions, have once again fallen into a terrible situation where their position losses are rapidly expanding.

"Boss Su, the sentiment in the pound exchange rate market is changing dramatically." When the pound exchange rate rose rapidly and passed the 1.5360 point, in the trading room of the main hedge fund "Hua Yi Cheng Yuan No. 1" inside the "Hua Yi Capital" institution in Hong Kong City, the trading team manager Qu Zecai reported, "The long positions in the market are surging, and many short positions are covering and closing. If we continue to increase short positions through grid trading, I am afraid that at this time when the longs have an absolute advantage, we will suffer greater losses and a more serious passive situation."

"Is there any unusual news in the market?"

Su Yi did not directly answer Qu Zecai's question, but asked with a smile.

Qu Zecai nodded, but before he could speak, Frederick, the main hedge fund manager of Aberdeen Asset Evolution No. 1, who was in real-time communication with the fund trading room, responded: "According to the news five minutes ago, French and German politicians will visit the UK this weekend. There will also be an internal EU economic meeting this weekend, which will have a significant impact on the direction of the pound exchange rate."

"It's not just the impact of these two pieces of news." Kong Fansheng from Huayin International's Investment Department also said at this time, "According to the news just now, UBS International has publicly issued a report on its future expectations for the pound exchange rate, as well as data on its long positions in the pound exchange rate.

According to the expected reports issued by it.

UBS International believes that the UK's economic performance in the second half of the year will be better than in the first half.

In addition, there are two major factors: the Bank of England's aggressive monetary policy to maintain the market exchange rate and the Federal Reserve's delay in raising interest rates.

The pound sterling exchange rate will perform relatively well in the second half of the year, and it is expected that the pound sterling exchange rate will stabilize above the 1.7000 mark in the next six months.

As for the data on its long positions in the British pound exchange rate.

To be honest, this has somewhat exceeded the expectations of major institutions in the market regarding their long positions.

At this stage, the long position of the British pound exchange rate held by UBS International has reached 25 lots, which is almost a three-year high.

"25 long positions?" Hearing this data, Meng Shengfei from Huayin International's Investment Department was obviously surprised and said, "This is more than the long positions held by Huifeng Global Asset Management, the current dead-end bull in the pound exchange rate market. I didn't expect it... It turns out that the one who is determined to squeeze us out in the market is UBS International."

"The key is not how many long positions UBS International holds," said Frederick. "The most important thing is the impact of this institution on the overall sentiment of the pound exchange rate market. You have to know that UBS International has a huge influence on the global foreign exchange market."

"If the impact was not significant, the pound exchange rate would not have continued to surge by more than 80 points in just 1.5300 to minutes." Kong Fansheng said, "UBS International's public statement has put us in a passive position. The previous strategy of curbing long positions at points and guiding long position holders in the market to gradually cover their positions and jointly suppress the market trend is probably no longer effective."

"We really can't hold on to it," said Meng Shengfei. "If we hold on to a certain point when the market sentiment has obviously reversed, it will only waste funds and fail to achieve the strategic effect we want, let alone prevent the longs from forcing positions and pushing up prices."

"With the positive driving force and the intentional guidance of the main long institutions in the market, when the market sentiment has changed temporarily, we naturally cannot stick to the 1.5300 point line." During the discussion, Su Yi said after fully understanding the market information, "Stop adding new positions, wait until the positive market is fully digested and the emotional reaction is completed, and then concentrate funds to increase positions and fight back."

In the financial market, whether it is stocks, futures or foreign exchange.

Su Yi felt that one must go with the flow.

At this time, the trend of the pound exchange rate market was stimulated by favorable news and the deliberate guidance of large bullish institutions such as UBS International and Huifeng Global Asset Management. The bullish force on the market was strong, and long positions were increased and short positions were covered and closed extremely rapidly.

This is a situation where bulls completely dominate the market.

If they forcefully invest funds and continue to increase their short positions, they will block the upward movement of prices.

This is like forcibly blocking the floodwater when it breaks the dam. It will not have any effect except wasting money.

Instead, we will temporarily allow the market to move upward and continue to realize the immediate positive factors and emotional feedback in the market.

Wait until the long funds have made some profits.

In other words, when the bulls in the market start to feel that the positive feedback is complete and they have the idea of ​​taking profits, they can take the opportunity to increase their short positions and concentrate their funds to attack the market, which will be more effective and can fully curb the effect of long squeeze.

Although a short-term sharp rise in the pound sterling exchange rate will cause huge losses to their positions.

But as long as your position does not get blown up and you are not forced to close your position by the bulls in the market.

Just maintain sufficient margin size and adequate cash reserves.

Then, when the bullish sentiment in the market turns from strong to weak again, a large number of profitable bulls will concentrate on taking profits and closing their positions and leaving the market when the good news is realized. At this time, the losses that have rapidly expanded will always gradually narrow again.

What's more, in Su Yi's opinion...

At this time, the so-called positive news in the market is not enough to truly reverse the trend of the pound exchange rate market.

Moreover, he knew that the private negotiations among the leaders of several countries would not produce any results at all.

Now that the referendum has evolved into a public vote and the direction of the whole thing has deviated from the British government's original expectations, no one can unilaterally prevent the referendum from happening, and no one can unilaterally forge or change the voting results.

Therefore, no matter how the main long institutions in the market, led by UBS International and Huifeng Global Asset Management, struggle.

Nothing can change history and outcomes.

Nor could he be forced to cut his positions on the pound exchange rate.

"Well, the counterattack must be at the divergence point of the market sentiment to be effective." Kong Fansheng agreed with Su Yi's idea and said, "Generally speaking, the profit target of short-term day traders in the foreign exchange market is generally in the range of 50 points to 100 points.

Coupled with the recent trend in the pound exchange rate, the fluctuations have been extremely violent and frequent.

This means that short-term speculators who frequently trade in the market will never dare to hold positions for a long time.

That is to say...

From the psychological perspective of short-term speculative traders' intraday speculative trading, under the stimulation of positive market news, the upward range of up to 100 points, around 1.5400 points, will definitely encounter huge pressure of profit-covering.

We will wait for the profit-taking to be covered, and then take the opportunity to add new short orders to suppress the market.

The results achieved will definitely be better and more appropriate than they are now.”

"Good steel should be used where it matters most." Meng Shengfei said with a smile, "I can understand this change in strategy."

"I guess the turning point of the long-short divergence that Mr. Su mentioned will be reflected in the U.S. trading phase." Frederick thought for a moment and said, "The bullish positives over the weekend actually did not touch the underlying logic of the change in the pound exchange rate trend, nor could it change the referendum result on June 6 next week. I believe that when the market trading time enters the U.S. trading phase, institutional funds such as 'Bank of New York Mellon', 'Citibank', and 'Blackstone Group' will make a difference on the market."

And just as several people discussed and predicted...

As market trading hours progress.

As positive market news continued to materialize, the pound sterling exchange rate surged all the way to around 1.5385, where it began to encounter strong resistance.

Many intraday speculative short-term traders began to take profits and reap immediate profits.

"Ah... I feel like I can't go any further."

Seeing that the pound exchange rate continued to fluctuate around 1.5385 for more than ten minutes, someone among the many intraday speculators gathered in the online forum in the foreign exchange market sighed.

"It is normal that the pound cannot go up. In recent days, the exchange rate of the pound has been fluctuating between 1.5300 and 1.5400. The huge forces of long and short positions gathered in the market are unable to do anything to each other for the time being. Naturally, its market trend is unlikely to form a sustained unilateral breakthrough trend."

"Didn't they say there was some major good news?"

"It's an uncertain non-public meeting, and the outcome is still uncertain. I think it's enough to support a rapid rebound of about 100 points in the pound exchange rate."

"There is huge pressure at the 1.5400 level, so I think it is better to take profits immediately."

"Before the referendum day, there is only an expectation of violent fluctuations in the pound exchange rate, and no expectation of a unilateral breakthrough."

"Yes, at this stage, it is definitely safer to do intraday orders."

"Let's stop while we're ahead. This rebound has earned me about 60 points, close to $7000, which is enough."

"It now appears that the 1.5400 level should be the last line of defense for the main bears, while the 1.5300 level is the last line of defense for the main bulls. Before there is clear news that will have a substantial impact on the referendum result on the 23rd, it is estimated that the pound exchange rate can only fluctuate within this narrow range."

"Alas, even though UBS International is such a big institution, it seems that its strength is not that great."

"Such a huge short position in the market, how can it be so easy to defeat it without sufficient certain news?"

"So it is better to stop while you are ahead and never hold orders overnight. This is the correct approach."

Under this relatively consistent cognition and expectation of the intraday speculative traders group...

Accompanied by discussions among many people.

Around the pound exchange rate of 1.5385, more and more intraday speculative traders began to cover their positions.

As more and more longs covered their positions in the market and the upward pressure on the pound exchange rate grew, time gradually turned to the US trading session.

Su Yi stared at the trend of the British pound exchange rate.

Finally, the operational strategy and trading instructions were once again issued to all the traders in the trading room, as well as the institutional fund managers of Huayin International and Aberdeen Asset Management who jointly launched the attack, to concentrate on increasing short positions and counterattack the main long positions in the market.

(End of this chapter)