Rebirth of the Capital Legend

Just when the Bank of England did not dare to go all out and did not dare to continue releasing its US dollar foreign exchange reserves too aggressively, it stubbornly maintained the pound exchange rate.

As the US trading period progresses.

At 12:1.5100 a.m. Yanjing time, the pound sterling exchange rate finally fell below 200 points again under the joint counterattack of major short capitals in the market and the pressure of large-scale short orders, and continued to fall by more than 1.5000 points, causing the pound sterling exchange rate to return to the lower edge support position of the huge shock platform of 1.5400 to points.

At the same time, the pound sterling exchange rate continued to fall in a short period of time.

The size of open long and short positions in the market also changed dramatically. The net long position once again dropped rapidly from nearly one million lots to 50 lots.

In addition, preliminary vote counting results were announced in England's Shetland Islands, Orkney Islands, Le Brides Islands and other regions.

In addition, the exchange rate trend of the online pound sterling public trading market has fallen rapidly.

In the offline black market, the rapid decline in the pound sterling exchange rate was even more rapid. When the pound sterling exchange rate in the public trading market fell below 1.5100 points, the pound sterling exchange rate in the black market had already fallen to around 1.4400 points.

And in this situation.

In the open trading market of the British pound exchange rate, the main short-selling capital institutions on Wall Street have already taken the absolute initiative.

It is also affecting the exchange rate trend of the pound by selling a large amount of pounds, increasing the panic selling and bank runs of the pound by many global capitals, and at the same time guiding more capital to further sell the pound.

"Eh... Looking at the changes in the long and short positions in the market in the past hour, as well as the changes in the exchange rate in the offline black market, it seems that the Bank of England does not seem to have further sold off its US dollar reserves and increased its long positions in the market." Noticing that the pound exchange rate trended downward very smoothly and did not encounter continuous resistance from bulls in and out of the market, at midnight, Beijing time, Wall Street, Goldman Sachs Group's foreign exchange market trading department, Christine, as the company's chief market analyst, speculated after synthesizing the latest market news changes and the actual market trend, "Could it be that the Bank of England intends to give up? If so... then let's focus on forcing longs and induce various funds in the market to continue to sell, causing the pound exchange rate to directly break through the 1.5000 mark, and the opportunity to collapse the long sentiment in the market will really come."

"The news at this time is basically biased towards the negative direction." Dominic, the product manager of the company's main foreign exchange trading fund, responded, "This period of time is when the short capital of various systems in the market is frantically venting emotions, and at the same time, the long capital of various systems is covering stop losses and profit on a large scale.

This is a moment when market sentiment is one-sided and the news fully supports short sellers venting their emotions.

Even if the Bank of England intervenes in the market forcefully, further releases large amounts of US dollar foreign exchange reserves, and significantly increases its long positions in the market, it is still difficult to curb the decline in the pound sterling exchange rate, and it is also difficult to fight against the combined efforts of funds in the entire market.

Therefore, I think it is normal that the British central bank did not take action at this time.

Judging from the current market trend, various market information and internal news, it is still unclear whether the Bank of England will abandon the pound exchange rate. "

"Whether the Bank of England will abandon this position or not..." Christine smiled and said, "It's always right that the short-selling capital in the market has already taken the initiative, right?"

Dominic nodded slightly and said, "That's natural."

"If we want to further expand our results, it shouldn't be difficult." Christine said, "As long as the 1.5000 point, the bullish psychological defense line, is completely broken, I think next... there is no need to induce too much market sentiment, and the long position holders in the market will further trample on stop losses."

Dominic thought for a moment and said, "Let's wait and see. Although the current market sentiment and its trend are clearly biased towards the short side, with a high probability that the referendum result will favor staying in the EU tomorrow, and with most of the funds in the market still having a stubborn impression and opinion of the market's volatile trend, it will not be easy to break through the 1.5000 mark in one fell swoop.

Moreover, at this time, we cannot be sure of the Bank of England's attitude towards market intervention.

In order to increase the certainty of transactions and control the position risk of newly added transaction orders.

I think it would be better for us to wait a little longer and further understand the Bank of England's trading strategy and intervention attitude towards the pound market exchange rate before further increasing our positions on a large scale.

At this time, the uncertainty of the market trend is still relatively high.

Let other aggressive short-selling capital institutional groups and many speculative and follow-up short-selling retail investors in the market test the real support strength of the market at 1.5000 points.

Given the previous trend, I still think that the chances of winning on the right side are significantly greater than those on the left side. "

"That's fine." Christine nodded slightly, thought for a moment, and continued, "Although I think it's impossible for the pound exchange rate to rebound from around 1.5000 and return to the 1.5300 mark, there's no problem in further understanding the Bank of England's strategic plan and taking a more certain right-side opportunity."

"Yeah." Dominic nodded and said, "I estimate... in the next one or two hours, if there is no major change in the latest market news, the Bank of England will most likely abandon the 1.5000 mark."

“It’s like a repeat of last year’s ‘Swiss Franc Black Swan’ night!” Christine exclaimed.

"No, the situation facing the pound exchange rate now is more serious and more dangerous than it was then," Dominic said. "After all, the number of open long and short positions in the market is completely different from that time. I'm not saying... Once the market sentiment completely collapses, no central bank or capital institution can contain this level of long and short positions."

"I agree." Christine said, "But it's obvious that the Bank of England has also learned its lesson this time. Since the Brexit referendum, the Bank of England has intervened in the market with slogans rather than actions, facing the continued extreme fluctuations in the pound exchange rate. Even when intervening in the market with real money, it has been very restrained in releasing US dollar foreign exchange reserves. It seems that the Bank of England will not play its trump card until the referendum result is officially announced."

"In every financial crisis, the British pound has been targeted by all kinds of capital." Dominic laughed and said, "After going through so much, even the dumbest person has learned to be smart.

In fact, for the Bank of England.

The trend of the pound exchange rate is not important, as is how the short-term intraday trend develops.

From the perspective of the Bank of England and considering their own interests, what they need... is just the long-term stability of the pound sterling exchange rate, which can truly stabilize the confidence of global capital in holding the pound sterling exchange rate.

Whether it is an extremely volatile trend, a unilateral downward trend, or a unilateral surge trend.

All of these are not conducive to global capital holding large amounts of pounds and having firm confidence in holding the pound.

in other words……

If I were the Bank of England, I would not take the huge risk of forcibly supporting the market and stabilizing the pound sterling exchange rate before the referendum result on the 23rd is officially confirmed.

After all, the scale of long and short positions is so large.

If you want to stabilize the pound exchange rate and forcibly support the market, the cost will be extremely high.

However, if we wait until the referendum results are officially confirmed on the 23rd, the long and short sides in the market will decide the winner after a fierce battle, and the size of long and short positions will drop significantly.

At that time, if the Bank of England enters the market again to maintain the stability of the exchange rate, the cost will be much smaller.

As for the short-selling and long-selling capital institutions in the market.

In fact, if we study the underlying logic, we can find that no matter which institution participated in this speculation, its interests are not on the side of the Bank of England.

Therefore, if it is really impossible to curb the development of the pound exchange rate market and its extreme fluctuations.

It is natural and reasonable to abandon the strategy of forcibly propping up the market and forcefully intervening in the market, and it is in line with their fundamental interests. "

"If we exclude the strong interference from the Bank of England..." Christine smiled and said, "Then the probability of short-selling capital winning in the current market should be redefined."

"In my opinion, it is very difficult for the bulls to turn the tables under this situation," Dominic said. "I heard that Citigroup still has billions of pounds in its hands, waiting to continue selling to suppress the pound exchange rate, thereby increasing their profits from the large-scale long positions they hold in the pound exchange rate trading market."

"It's not just Citibank." Christine said, "Even UBS is secretly selling pounds."

Dominic said with a little surprise: "I didn't expect this. It seems that... the changes in the long and short positions in the market are much more optimistic than we thought!"

The two of them conducted an in-depth analysis of the market trends and discussed trading strategies.

At 12:20, the pound exchange rate had fallen below 1.5050, setting a new intraday low, and getting closer and closer to the last psychological defense line of bulls at 1.5000.

As the pound sterling exchange rate continued to fall, the net long position in the market had fallen back to 30 lots.

Gangcheng, inside Tianhe Capital.

Gu Chijiang, who had been forced to close a large number of positions below 1.5100 points to stop losses, and then went long on a large scale and almost with all his positions above 1.5200 points, is now staring at the trend of the pound exchange rate with a terribly gloomy face and an obviously anxious look.

At this time, he was in charge of the entire main hedge fund.

The loss of nearly 20 long positions in the British pound exchange rate held by the full warehouse has reached more than 5000 million US dollars.

This made his current psychological pressure feel like he was carrying a mountain on his back, making it difficult for him to breathe.

Logically speaking, when the position loss reaches this point and the position is at the upper limit, his current best strategic choice is to unconditionally reduce the position and stop the loss to avoid the pound exchange rate falling completely below the oscillation platform and breaking through the most important support line, which would bring more serious losses to the fund's holdings.

But he had experienced a volatile trend a few hours ago when the pound sterling exchange rate rebounded strongly from around 1.5050 and jumped to 1.5300.

Especially after experiencing the transactions of cutting losses at the bottom and chasing highs to increase positions.

Faced with the weak fluctuations in the pound sterling exchange rate at this position, he had to consider more and had to worry that after he stopped loss, the pound sterling exchange rate would rebound strongly and quickly regain lost ground. After all, although there were short-term negative impacts on market news, from the perspective of the overall situation, the expected results of tomorrow's referendum would most likely not change. There were also a large number of long positions in the market, and their confidence had not collapsed at this time. The entire market still had the momentum for a strong bullish counterattack.

This concern made him particularly hesitant in implementing the trading strategy of stop loss and reducing positions.

"Boss Gu, I think we should... reduce our positions and stop losses." Noticing Gu Chijiang's hesitation, Xie Hongxing, the manager of the trading team, pondered for a while and reminded him dutifully, "The net long position in the market has dropped too quickly. This shows that there are indeed a large number of long position holders in the market who are frantically covering their positions. It also shows that the long and short forces in the market are rapidly becoming unbalanced."

"I know, but the motivation for the bulls to fight back still exists!" Gu Chijiang said, "Besides, with the referendum result tomorrow still uncertain, and the vast majority of speculators and investors still holding a volatile view on the pound exchange rate, the support line near the 1.5000 mark is still very strong. Let's wait and see... I think this position can still rebound.

We still need to firmly hold on to our positions and not easily waver in our confidence.

Last time, we lost confidence and were beaten up by the market. We lost tens of millions of dollars!"

After saying that, Gu Chijiang turned his gaze to the British pound exchange rate market trading board again, staring at the trend of the British pound exchange rate intently, with a nervous expression on his face all the time.

And just when he was extremely nervous and his palms were sweating.

The lowest point of the pound sterling exchange rate was 1.5026 points. As expected, under the relatively consistent expectation of volatile trends in the entire market, and with the help of many profitable short-term short-selling funds choosing to cover their positions to lock in profits, the continuous decline of the pound sterling exchange rate was finally curbed.

Next…

At 12:36, the pound exchange rate began to rebound from the lowest point of 1.5026.

At 12:49, the pound exchange rate recovered 1.5050 points, and the expectation of a rebound in the market was further strengthened.

At 1:1.5100 a.m. Yanjing time, the pound sterling exchange rate rebounded and regained the point mark, and the net long position in the market resumed growth.

At 1:17, the pound sterling exchange rate rebounded to 1.5142.

Then, just as the entire market, most of the intraday speculators, many of the main long institutions in the market, and even many short institutions, believed that the pound exchange rate would most likely rebound further and continue to recover the 1.5200 point or even the 1.5300 point, repeating the previous large shock pattern.

Suddenly, a series of large-scale short orders poured out on the pound exchange rate board.

Directly and with lightning speed.

The pound exchange rate was once again pushed back to around 1.5020.

At the same time, the number of unclosed short positions in the market also exploded rapidly. Many large capital short-selling institutions around the world began to increase their short positions at full speed and concentrated on selling stocks.