“Taking profit never a bad thing”
That tends to be the comment from a trader who has taken his profit but isn’t convinced he has squeezed every pip out of the position.
Sadly, I fall into that category with my short cable position. I have taken profit since I cannot believe that given the comments from several MPC members that he earnings data due for release later this morning is going to have anything other than a positive effect on the market.
Talking to a couple of “old hands” yesterday, they detect the hand of Central Banks at play in the levels of the common currency and pound. A nudge here a push there and suddenly Euro Sterling is fifty pips higher. Is that true or am I just fitting a story to the price action? It is far more likely that the Euro’s 57% share of the dollar index has made it a proxy for the index’s recovery, but you never know.
The dollar’s rally is starting to look exhaustive to me now, there is plenty of resistance between the current 89.80 level and 90.50. That of course coincides with the support at the mythical 1.2280 level. That was where it was rumoured the ECB was going to make sure the Euro didn’t pass. It was clear at the time that short of outright intervention that would have brought (justified) claims of currency intervention from Trump and Mnuchin, there was little Mario Draghi could do. Given the buying that took place at and just above that level, it is certain to be solid support on the way down.
Is Brexit still “a thing”?
Out of sight out of mind. There is nothing much happening on the Brexit front now, so the market assumes that all is rosy between London and Brussels. The reality is likely to be very different and since the timetables for meetings and press conferences are shrouded in mystery a nasty surprise could happen at any time.
Barnier’s teasing “transition is not a given” comment was the last we heard, and it is improbable that either side has changed its position in the interim.
The clock is ticking and as February comes to an end, we approach one year before the UK leaves the EU and as things stand, it will be the hardest of Brexits. It is generally agreed that Brexit is going to knock growth in the UK with the degree of slowdown directly related to the type of Brexit seen. That is not necessarily the case and it is more likely to be the end of uncertainty that has the greater effect. Businesses have been holding back on investment and once they have a clear path, should start to push forward. Whether the market sees it like that is open to doubt and the simple hard Brexit bad soft Brexit good mantra will remain, for now at least.
Meanwhile in Cryptoland.
A man came to do some work on the gas meter in my home a couple of days ago and we got chatting. He asked me what I do, and I explained. He told me he had “dabbled” in oil futures and asked me about bitcoin. I asked him what he used to make decisions on his oil trading and he told me he looks at the graphs (not charts, graphs) and decides from there. I told him to stick to oil since his methodology won’t work with Bitcoin.
That conversation showed me one other interesting thing. That guy had no training in technical analysis but used his “eye” to decide what to do. That is charting in its purest form and illustrates a thing many of us forget. All a chart is, is a visual record of all the buying and selling that has taken place and should be used accordingly.
Bitcoin is starting to pick up again. Slowly buyers are coming back after the rout of the last six weeks. The superlatives continue; it has just about doubled in price versus the dollar since the low seen at the start of February.
The “encouragers” are back out in force telling us how “they told us so” and “now is the perfect time”
Personally, I hope that the rally has been created by genuine users of Bitcoin who see the benefit of holding it and occasionally using it. It is a strange phenomenon but once the man in the street has bought it he is loath to let it go.
