Friday, January 30, 2009


I recently joined kaChing virtual stock exchange, a Facebook application, to trade. It's not that professional to trade on facebook, but the appplication is quite user-friendly and datas are quite easy to follow. The markets it trades are US, but it doesn't specify which, which caused me confusions for the last few days. I have invited a few of you to this application, please invite further.
Following the news last week, I decided to go long on Amazon, BP, McDonalds, Tesco and go short on Toyota and UBS. I made not-so-small profits on the first day, however still suffered losses which makes my portfolio underperforming compared to my target achievement, and here are the analysis.
The longs:
Amazon and Mc Donalds both posted high profits in the last quarter, especially Amazon which posted higher than expected profit. The news came in Thursday, and I quoted the long positions right after then, in order to benefit the daily gap of an enormous volume trades of both stocks. However, I wasn't able to trade right when the market open, hence couldn't benefit from this. I was still able to earn 8% of capital gains from the 17% Amazon intraday stock rise. McDonald however ended up 0.2% down, after a day trading in a fairly wide band. The problem of timing was similar here, as the automatic system, like in the Amazon's case, put my sell on when the stock was near its peak of the day, which was very early in the day. I therefore suffered a huge loss on this stock, but I'm hoping to recover the stock soon, selling it after achieving its targetgain. Tesco contributed a 2.2% rise in capital on its own trade, helped me gain over 10000, a reasonable amount for such a small trade, given its quantity was limited when I was buying. BP ended the day with a loss, as oil price went down. I went long for BP following the news Opec would cut supply, which was reannounced a couple of days ago, but I think that the real cut will come later, by then the stock would most definitely rise.
The shorts:
The reports show Toyota was likely to post the first loss quarter ever, which would have a significant impact on stock price. Being able to capture this, I shorted Toyota stock on Thursday and enjoyed its downward slope on Friday, earning over 80,000 on this trade. The short on UBS appeared to be a loss during the whole day, as stock seemed to go up all the time. I anticipated that the financial industry is not ready for a rise, when banks still post losses and, business downscales still exist. The set up of so called bad bank that absorbs toxic assets and insure profitable assets, and the news on bank bonuses being cut down might be the reason for this bullish behaviour, since it promises extra cashflow and a more promising performance.
If the trade was more realistic, I would have used option to hedge again this UBS position, since I quoted it short at risk and I knew it. Fortunately, the rise was not significant, thus I didn't suffer too much loss. But I expect a slight upward gap monday, and maybe I will have to stay in this loss for a little bit longer.
There is a site for UK stock trade . I registered on Friday, and haven't got time to trade on it.

Thursday, January 22, 2009

Dear all,

I have connected to a few guys who have wide networks from funds or private equity companies and seeking business opportunities in Vietnam as an emergin' market.
Fundamentally, I look around on the market on matching them to potential deals.
But we need a brochure or executive summary to provide them general information and get their deals.
Our blog is more useful than ever at this point. I understand that you all are quite busy, but take a little time for this deal, we could move forward.
I would like to ask you guys to design a self-introduction includes what we have, what we can do, what we aim to, etc. I mean it is something can persuade other investors to cooperate with us, though we are young but ambitious.
plz leave your opinions on this point.
I will respond to you guys soon. Should you have any inquiry, plz also post your question here.



Tuesday, January 20, 2009

Are the interventions any effective?

Following a serie of government stimulating packages currently taking place around the world, ranging from the US $825bn following the $700bn package announced earlier, the UK 250bn GBP following the 500bn GBP package announced in October, the German $80bn package, all aiming for tax cuts, loan insurance and buying up shares in the loss-making giant banks. All these efforts, as we all know, aim to cure the effects of credit crunch, which starts from November 2007, results from the mortgage delinquency, foreclosure of assets, the house value deterioration, both US and UK housing market, and later on, the collapse of Equity markets.
The stimulus packages were initially released in the US, then is followed in a large number of countries, but the question is, are they really having the impact the governments want to? Are they targeting the root of problems? Are the governments using the tax payer's money efficiently? Several articles have shown different analysis, which I will be mentioning here, along with my own view. My entry will focus on the UK stimulus package.
Opposition MPs argued that the government's measures were inadequate and too many details remained unknown. While Mr Brown is still throwing massive amount of tax-payer's money to the market, the outcome remains uncertain, as all we can see are the steady fall of house prices, dating from very far last year, low oil price, low sales across all the retailers. Christmas 2008 experienced London's worst Christmas sale in history, the bankruptcy of one of the top retailers, Woolworths, and the CPI in December drops a full percentage point to 3.1%, facing the threat of deflation, has all signalled that demand is very low and is still decreasing.
Meanwhile, unemployment has begun to rise. Last quarter of 2008 showed a 6.0% level of unemployment, up 0.4% from last quarter and 0.7% from last year's quarter. This is understandable, as low demand causes firms to respond, with lower production demand, to cut cost and production scale by reducing the number of employees.
Low demand, high unemployment bring low economic growth. The government's attempt is to boost production by encouraging lendings via banks, therefore, hopefully, increase employment and bring the economy back to the boom. However, there is a big issue here.
High unemployment is caused by low demand, and is also the cause of low demand. With no income to spend, the consumption demand is low, therefore it is hard for firms to expand productions, even with the low interest rate and all the insurance potential bad loans, as the low demand simply means there are little hope in making profit. Firms are therefore reluctant to borrow, even if the banks are offering loans at an incredible rate. In this economic situation, even the firms who invest very riskily, and normally would not borrow will borrow, as the cost of borrowing is too low. This raises the possibility of losses when operating businesses, but even not succeeding, both the firms and the banks face no losses, as the money lent out was insured by the government's huge bail-out budget. This feels like free money, and of course, creates moral hazard, a temptation for banks to just lend without having too much thinking. To prevent this, banks have to make "very specific legally binding agreements to lend more money", quoted Chancellor Alistar Darling, but they are actually causing more troubles to lend, therefore there is a threat to the loan activities from the banks. The close-to-nationalisation of giant banks, most significantly RBS the forthcoming nearly 70% government stake after the 5bn GBP preference share converted to standard share, will result in the banks operating at smaller scale and be more cautious with the tax-payer's money. The most recent result is the RBS's withdrawal of 1.6bn GBP in share from Bank of China, as the tax payers don't want their money invested offshore, even though the Emerging market such as China still perform steady growth within this economic turmoil.
So targeting banks might not be as efficient as the government think it might be. The problem lies with low demand, not the lack of lending activity. It is the tightness of credit that causes the economy to fall, and low demand is the cause of the credit tightness, also the root of all the troubles. The government in an attempt to boost the economy, must definitely boost demand, and the best way is, I think, via tackling unemployment.
In the UK, high unemployment is being tackled, though it is not as in high priority as the insurance on bank lending. The whole stimulating package includes the tax cut and the promise of 2500GBP for every more-than-six-months unemployed person joining the company. However, the tax cut does not apply for everyone before April 2009, especially those on flat rate scheme, and for some, tax cut doesn't apply. The joining of the more-than-six-months unemployed will require trainings before they can get to work, and this might be the reason why unemployment is still high. I think that the government needs to put unemployment a higher priority tarket to tackle the economic downturn, rather than tackling the banks, which are proving to be an unefficient tactic, after the massive bail-out and stimulating funds from the government still results in the 45bn GBP loss of RBS and the repayment of loan to the government from Northern Rock having to extend.

Gold Good for the short?


I've never been big on following gold, however the past few days I've been noticing the headlines have been quite repetitive like the one above. Obviously with crisis the traditional explanation you will have flight to quality to some safer security. Which is also interesting, arguments of inflation also seem to push gold prices higher. It seems we will always have some justification for gold. At this point, how much of this is speculation? All things considered, if fundamentals of the economy were certainly the cause of gold performing extremely well in 2008, then one should expect the same in upward trend for gold in 2009 as economic condition are not expected to get any better this year.

Correlated to gold:

as stated by David Moore, chief commodity strategist at Commonwealth Bank of Australia. "Gold is influenced by the U.S. dollar making ground against the euro,''

If this correlation certainly holds true for the first quarter, I would have to be short on gold prices as all my bets are short the dollar and long on its pairs (Eur, GBP, AUD, CAD... though the GBP short term is looking worrying, will have to discuss that later).

If I really do expect the dollar to weaken by the end of the first quarter, then I should as well certainly short for gold.

The bullish Argument for Gold:
1. Weak economies
2. Poor sentiment
3. *Treasuries/Bonds become less attractive.
4. Continued upward trend

*I would like to note, I've noticed in an article that many funds are not taking investors money for new investments as the Funds cannot make profits on treasury/bond related funds. Some are even struggling to maintain positive yields.

Scenario for Bears:

In order for a short in gold to happen, I would have to hope that the correlation between gold and the dollar is very strong, and that there is no other exogenous factor that would float the prices of gold.

Technical analysis is still strong in my opinion for the dollar to weaken, I think that the reason the dollar is doing so well currently is to due the relative health of other economies. First many of the Problems originated from America and only showed up later in other economies. Since I do not believe there to be any significant changes in the US economy, we may see a reversion of poor sentiment on the US economy and other economies will instead look relatively better.

Since it hard to see the full picture since the Media can be biased, this argument heavily relies on the technical analysis of currencies and correlation holding true...

Also it is possible contrarian perspective may work here as there maybe too much bullishness going into gold, after all where does the real value of gold lie?

we will see in about 2 months time how terribly wrong I was or how terribly right I was...


Gold Price: 828.7 off bloomberg
EUR/USD: 1.29615 4:38 AM off FXCM
GBP/USD: 1.39.7 4:38 AM off FXCM
USD/CAD: 1.19231 4:38 AM off FXCM
AUD/USD: 0.66371 4:38 AM off FXCM



Excellent Quote

Here is an excellent quote of the day from "The Big Picture" :

Quote of the Day

"Nothing has been a more reliable indicator for an upcoming recession as the price of Oil. Every major bear market, every major economic decline has been preceded by a large spike in oil prices. The 73-74 recession, recession of beginning 80's and the recession of 2000. Oil prices jumped 80% between 1999 and 2000. Oil prices have been the most important indicator of major economic disasters. Whenever Oil prices rise about 80% from year ago levels, a fair chance does exist that a recession/bear market will follow." —Stephen Leeb —Danish Physicist Niels Bohr was known to have a horseshoe prominently displayed above the door frame of his office. Asked what it was for, he replied that it was a good luck charm that helped his physics equations. "But do you believe in that superstition?" he was asked. "Of course not!" the future Nobel winner replied. "But I have been told that it works whether you believe in it or not..."


This is an excellent point of why there are divergences in fundamentals and gives weight to many aspects of Dow Theory. Often, I feel that Dow Theory works to the point of able perception and often that is where it fails. Hence the support for fundamental analysis along with technical analysis. Also, This article points out the the self-fulling behaviors and irrational price movements since in today's markets. Which also confirms a need for sentiment analysis, or may give way to contrarians.

Bank of America

I was scanning the daily blog "The Big Picture" which I think you all should subscribe too. came across this funny article.


Sunday, January 18, 2009

news 18/01/09

I have been reading Robert Peston's blog, a BBC's business editor, for a while. He has some good stuffs on explaining what's happening in the economy. Anyways, picking on the news I read yesterday, the Treasury and UK Financial Investments have been preparing an offer to convert £9bn of preference shares that they own in RBS and Lloyds/HBOS into ordinary shares. It's obviously to ease the 12% dividends on those preference shares, which amount to £600m and £480m for RBS and Lloyds respectively. This offer is another way to relieve the pain of the current tight credit condition. Theoritically, it's believed that every year about £27bn more should be lent if the total amount of £1080m is retained within the banks.
However, RBS whose 57.9% is currently owned by the public sector, would be more likely to accept the offer eventhough it means the state's holding will rise to 70%. We can see there is a trend for nationalisation including both fully and partially. Nationalisation is one of the common ways to rescue banks, supported by the case of Northern Rock last year and AIG more recently, but is it all good? From my point of view, it'd place a considerable burden on the Government's finance in terms of money spent to encourage lendings and what is left for the rest of the community. The economic difficulties have brought about a shrink in almost other sectors' activities. Not only have bankers lost their jobs but also teachers and employees from Mark&Spencer are facing the same problem. Would the Government be able to subsidise across industries if a major of their spendings is poured into the banking system? Moreover, the taxpayers are forced to put their money to partly protect banks against their high-risk loans (£37bn has already been injected into the banking system). If it does not show any positive sign in increasing lendings from banks in a very near future, how long would taxpayers be willing to do this?
It's interesting to see if Lloyds, who is of less interest, will agree upon the offer or not. After huge losses announced by City Group and others, will we have more and more fully-nationalised banks soon?

Thursday, January 15, 2009

Update on Currency positions:

** skip to the summary if you don't care about the evidence/support

As the week is nearing, it is clearly apparent that I entered positions with bad timing. However, this can be quite desirable as I am trend trading and I now know the current trend (the week has shown it to be quite bearish for the EUR,GBP, CAD and AUD). Through out the week all pairs I am trading (EUR/USD, GBP/USD, USD/CAD, AUD/USD) all counter trended my positions (B, B, S, B respectively). As you can see, some would probably call me super crazy as fundamentals would never warrant such bullishness. It is at times like this where one walks the fine lines of "loving" his trade and facing more losses.

Quick Reassessment:


This week the GBP/USD is moving counter to my expected overall trend and position, (unfortunately, I only am holding a one normal 200:1 leveraged position so sizing down is not an option, and simulating a hedging strategy would require more time than I can afford), however, BB's are coming to a squeeze and past price movements of 1.46128 in early November 2008 show a piercing of the 2nd deviation lower BB warrant price movements to the upper bands. Confirmation comes from RSI bottoming and MACD cross over of longer average crossing under the shorter average forming better support.

Weakening this technical analysis is the SMA's, cross analysis of 7, 14, and 21 SMA show that there is heavy downward momentum with the 21 over the 14 and the 14 over the 7 SMA. Though probably more experimentation with SMA's is necessary to gauge weather or not these average parameters are an accurate measure for the GBP/USD.

I will maintain my bullish stance as apart of developing discipline and from belief that the longer run (within 1-2 months time) will yield a higher pound. I would possibly see that the pound can reach into the 1.50 levels again. The support comes from my Bullish analysis above, though is still not as strong due to fundamentals and SMA analysis.


Of all the pairs being traded right now the EUR/USD is the most worrying in the shorter term as BB analysis shows a 3 week downtrend. Also BB's are coming to a squeeze along with possible reconvergence of the two averages on the MACD (as i forgot to define the parameters used for the MACD: 12, 26, 9 first two for the averages and the last for the histogram: in the future I will have to tweak the parameters to suit each pair). RSI also confirms possibly prices may have room to be further undersold. Also, the intial drop in volume from the beginning of the 3 week slide has peaked off in accordance with trend continuation.

Despite the bearish analysis above, more compelling to the bullish argument is the SMA analysis. Using the same parameters as before, the 7 SMA has crossed over the 14 SMA. This is a good starting point for trend development by means of support. Unfortunately price movements have not reacted in a bullish manner to this indicator, which may show some evidence disproving SMA anaylsis being relevant to this pair, though some back testing would be required to confirm this. More importantly would be a cross of the 7 SMA over the 21 SMA. There appears to be convergence of the 7 and 21 SMA moving towards each other but further downward moementum could prevent this.

*Quick back testing of SMA convergence divergence shows that at moments of convergences into bullish patterns EUR/USD can take up to more than 3 months of sideways trading before the bullish trend unfolds. When the patter unfolds the initial movements are strong and then leads to the 7 SMA touch the 21 SMA or briefing crossing under for a period of a month before continuing on uptrend. Of moments of crossing of the 7 SMA to the 21 SMA you will see it take a about one week for bullish moves to follow.

Within the next 2 months we will definitely see the squeeze in the BB and depending on the SMA orientation price movements can be determined. I would say in two months time pending on the squeeze of the BB if the 7 SMA crosses the 21 SMA the price movements will be indeed changed to uptrend. By the end of the first quarter we will see possible bullish trends into the second quarter 2009 for the EUR/USD.

Unfortunately I have run out of time to comment on my other positions as I must log in their P/L and get to class. I will comment on my other two open positions later.

Closing Notes:

Further analysis and back testing is required for the GBP/USD though I still maintain my bullish stance and I also maintain a bullish stance longer term for the EUR/USD. Though the current fundamentals worry me. I will have to discuss macroeconomic conditions of each of the regions I am trading pairs in later. If indeed my the bullish argument on the fundamentals can be convincing, my technical analysis would certainly complement this. In order for my technical analysis to be right, there would have be some underlying fundamental bullish signs to be happening. If a bullish movement does indeed occur within the next 3-4 months with continued poor fundamentals this may reflect a move of sentiment.

All in all, I am beginning to have great respect for those who can accurately trade long term charts since it requires lots of analysis, patience, and discipline and a strong stomach to counter trends as they can occur for months.

until then...

Monday, January 12, 2009


Quick follow up on pound:

It would seem that last week played out the scenario that the pound traded temporarily to the upside but returned to prices were it began from the beginning of the week. Overall, though I am sticking to my long position as the weekly charts are still showing long term bullish trend formation, same goes to my position on the loonie and AUS.

Entry for 1/12/09


Just a quick note on the EUR/USD:

On the 9th of January I closed out of a short at 1.36911, due to bullish trend formations. However, it would seem that this is one time Dow theory failed me, or to be more exact where applied the wrong analysis. It would seem my unfamiliarity of the economic region of Europe and the general characteristics of the EUR/USD is quite apparent. Despite my poor trading decision, it has provided a great learning opportunity. At the time I was only trading based of 60 minute and weekly charts, in general I hadn't 'bothered to follow up with the fundamentals as in depth as I would if I were solely focusing on the dollar. It would have seemed if I were more experienced or if I followed the region more carefully a little fundamental analysis could have prevented this wrong decision. It would seem that sentiment from the 9th till now started pricing in Trichets decision of interest rate cuts. Today I see bullish trend patterns forming, however, the big question is whether or not the markets have priced in the rate cut enough, or if later on rates will prove to drop the Eur/USD. Concerning fundamentals, I have heard arguments of a 1.20 Eur, I believe that to be quite possible, and it is something that would definitely improve the export situation for the Euro region.

Currently, though on the weekly charts there seems to be strong bullish trends forming still. It would seem last week, that my closing out of the EUR/USD position was premature, and that this week may show price moves moving to the upper 2nd deviation BB. There may be a temporary whipsaw to the upside as the the 7 simple MVA has already crossed the 14 simple MVA and is about to cross the 21 simple MVA. It is also showing that the BB are coming to a squeeze. Furthermore, there is short term support from January 6th to January 11, along with long term support from June 2007 to January 11, 2009.

Again the bullish argument seems very attractive for the next two weeks or so, but the fundamentals pose a huge risk again, as sentiment may have not been fully priced in. However, its best at these times to stick with a discipline and learn from it if it is a mistake. I see there room for a temporary change in trend for this week and into next week, I will re-enter into a buy position and adjust accordingly by the end of this week. However, I think past a few weeks fundamentals will still reign and further downward movements will have to be considered...

Sunday, January 11, 2009

"Layman's Financial Crisis Glossary"

I recently subscribed to a blog "The Big Picture," which I recommend all of you to subscribe to. Anyway, one of their authors posted this article from the BBC:

which I found pretty hilariously... then I realized, it actually might be somewhat useful for those just getting started with current events and for those whose native language isn't English. Either way for laughs or learnings... enjoy!

Saturday, January 10, 2009

FX rate in Vietnam

If you have been following the Vietnamese market recently, you will see that the State Bank has raised interbank USD/VND rate (official midpoint ) dramatically to 3% but still keep the band of 3%. Typically, banks and financial institutions operating in Vietnam have to follow state bank’s regulation on FX. Accordingly, they must transact FX deals within the variance band of interbank rate that SBC announces daily.

Earlier in November, there were a number of rumors on the issue that State Bank would lift USD/VND variance band to 5% from 3%, which is due to the heating foreign exchange free market. The USD/VND rate transacted in the black market was higher at 5% than the interbank rate. Rumors of such change in the foreign exchange band is driving the market.

Basically, a flexible foreign exchange rate is necessary for the economy amid recent economic turmoil. However, the change in this time becomes sensitive. Perhaps, the Vietnamese Dong devaluation is based on inherent attributes of the economy such as weaker export industry, or economic stimulation from huge money amounts injected into the economy. However, a key factor led to this situation is rumors and speculation.

The State bank's expectation of better liquidity foreign exchange rate could be not realized by the adjustment in the USD/VND interbank rate. But, speculators think that this action from State Bank shows a sign that Vietnam Dong could be continued to devalue in the short time. So, speculators don't want to sell USD out in the short term. Again, this leads to the shortage of USD in the market. In return, foreign exchange rate could be higher. Therefore, I raise a call that there would be another devaluation of Dong in the next time.

*edited by Alexander LĂȘ

Tuesday, January 6, 2009

Entry for 1/06/09


Is the sterling finding support against the dollar?

Since New Years eve I had opened a short position on the GBP/USD, a pre-emptive attempt prior to the "supposed" rate cut that will bring the UK to its lowest level of interest rates with in the 315 years as the media portrays it. Interestingly enough it would seem on the 60 minute chart we are seeing short term bullish patterns forming. This is a possible indication of the markets have priced in such a dramatic change such as an interest rate cut. If this is surely the case, perhaps a opening such a short so early might have been a bad idea. Opening a short right before the Central Banks decision would have been most appropriate since there would only be the initial drop (weakening of the GBP) before resuming a bullish trend if market sentiment is more bullish. This past week in general, the first week of 2009, I have noticed increased levels of bullish sentiment in the US equity markets. Correlated to this is the rise in the dollar in many of the Major pairs. My point in general is that the new year has hailed in some bullish sentiment, though I doubt this is not sustainable. Fundamentally the economic situation has not changed much, so even if the GBP/USD is indeed in a upward bullish trend it is probably something that will only be seen on the weekly charts. I have not been trading on technicals since the New Years Eve, though however Bollinger Band analysis could confirm such a temporary change in trend. The obvious volume and momentum indicators could be useful as well if one worked with these indicators often in relation specifically to the GBP/USD pair. However, I have decided to ignore more in-depth technials in the mean time and just focus on fundamentals and macro trends and sentiment. However, if I were not paper trading I would of course include all forms of analysis.

basic technical analysis:

If volume is strong enough with a break in resistance of 1.476 the GBP/USD could rally much higher at the end of the week. However it is most likely we will see a battle between the bulls and bears which we will see much indecisiveness towards the end of the week, and more likely we will see where the trend will be in 3rd week of January. In addition, if price levels were far extended beyond 2 deviation BB (which I have not looked at) any bullish price movements would be supported by this (look to weekly chart to confirm this). Based alone on the basic technical analysis I would say the trend would most likely go up based off bullish pattern formation such as higher highers and higher lows the past week(this is not including volume analysis).

(For those more interested in depth analysis in pattern analysis one can consider possible head and shoulder bottom reversal on the monthly chart (roughly 11/20/2008 to 12/31/08). Current prices moves from new years onward can be seen as flag and pennant continuations or possible formation of ascending triangles support a bullish move to neckline resistance on the head and shoulder reversal pattern... for you super bulls you could even develop your price target at around 1.65 based off this pattern, which would be inline with 1.65 resistance)


However, what can be worrying for a bullish model based of technical analysis is sentiment. Today I noticed that the US equity markets closed in the red. Considering this is the beginning of the week, this could possibly mean that past weeks bullish sentiment is ending, though it may possibly be that last week bull's are just taking some gains and bullish sentiment will carry through the week. One would would have to look to the equity future markets more carefully to see where sentiment will be for the week. If sentiment is truly bullish, people trading weekly charts could benefit from long positions. The next 2-3 weeks can be bullish weeks.


Macro considerations:

I would say any risks to a bullish model would be overall economic conditions. Those trading longer term charts would probably want to consider cutting back on some of their GBP/USD positions or hedging them considering strong arguments for short term bullish moves. Overall based on fundamentals, ignoring the extendedness of the GBP/USD on the monthly chart, the pound should still be in a downward trend.

Evidence as follows:

1. Credit markets are still stale as ever, less room for business to grow
2. Continued loosening job market, today i saw that Marks & Spencers decided to cut another 1,000 jobs, which leads me to my next point...
3. Consumption: despite a holiday boost, the fact that a company such as Marks & Spencers has to cut jobs truly shows a weakening of consumer willingness to support the economy. The reason I point out Marks & Spencers is that it is usually considered for middle class shoppers, and if middle class shoppers are getting hurt, this only leaves the upper class to support consumption and considering the percentage of rich to middle class and poor, it provides a bleak out look for consumption. Any models that say the middle class can continue to support economic growth should be abandoned as that may have possibly only been the case for 2007 and early half of 2008.
4. Rate cuts from Central Banks: The US interest rates are at an all time lows and the UK central Bank is planning on following suite.

All these fundamentals are the factors that are going to be driving a continued downward trend.


In conclusion, I would have to say that the next 2-3 weeks will be bullish for the GBP/USD considering sentiment can remain positive. However, if the next 2-3 has some bad economic reports or we have some more surprise job cuts, or if more financial companies show further signs of distress, then I would say price of the GBP/USD should remain around the same levels of the past week (around 1.45). Though, I believe that that sentiment will not be totally killed as much of the bad news will be priced in and I do believe we will see bullish moves within the next 2 weeks, we will definitely see prices hitting around 1.49 vs the current 1.46.

However, for the first quarter 2009, I would still say that the GBP/USD will remain weak and in downward trend.

For those of you who are trading charts longer than monthly charts, one can ignore what was discussed above and call long term support seen from 2001, and say that the charts are way over extended due to the financial crisis and maintain long position from here. This definitely would be popular for currency managers who agree with the media in that there may be economic recovery in the second half of 2009 leading to recovery in further years... though I would not personally subscribe to this long term trading idea as there are too many economic uncertainties that may take a few years to play out, such as restructuring of the financial sector and political impacts yet to be seen.

Brief on other currencies:

Of my other open positions, my best calls were shorts on EUR/USD from new years eve, and going long on the AUD/USD from new years eve. Though I had one really bad call long on the USD/JPY from new years eve, which I closed yesterday.

Another day to talk about a different currency...
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