It is very powerful, but it is definitely more painful to be beaten than to take advantage of the trend!
The British pound is so hot recently that I have written three articles about the British pound——
Many of the indicators I follow have reversed since last week.
It mainly depends on two indicators. The first is the UK-US 2y government bond interest rate spread . When the UK was in chaos some time ago, this indicator was positive. The UK interest rate was higher than that of the US. Now it has fallen back to before Ms. Truss took office. The difference between the second English and German 5Ycds also returned to almost parity. When these two indicators first started to improve, I had already bought the bottom of the British pound, and I was beaten continuously. It was still London time last Friday afternoon, and the non-American explosion was really too hurt. Re-entry started on Tuesday, and this wave of 300 points is basically full. I have been trying to buy bottoms for a month. I have a little suggestion: don’t try to buy bottoms unless you have a particularly strong willpower. The bigger the trend, the harder it is to catch the bottom reversal. Trading against the trend is too challenging. I tried to buy the bottom for a month, and I was tortured. Every week, I told myself to buy cheap, but when it really came down, I was discouraged by the turbulent situation. , I did the same thing the next week, and I admit I'm not as strong as I thought. . . Going with the trend is always the most comfortable and easiest way, don't use your brain, just follow along and you're done. I'm a crazy person. As long as I have the idea of buying bottoms, everything looks like a sign of reversal. I must practice it, otherwise I will regret it every time it rises.
The above picture is the picture of the 5yCDS difference between Britain and Germany. If you look carefully, it has already topped in early October, and it has been going downhill since then, but the pound started to rise a month later. If anyone says that the currency trade is expected, I will Jumped out and slapped it in the face with this picture, expected tmlgb.
This is the UK-US 2y government bond spread. The worst time is the end of September, and it has been recovering since October, which is consistent with the above signal. Now the difference between the two has returned to normal levels, but the market also delayed it by one month to reflect on the currency.
Of course, the reasons for the rise in the pound are not limited to these. More importantly, the mid-term elections in the United States are coming soon. It is obvious that the Democratic Party wants a good stock market, so Fed officials suddenly began to turn dovish. This may be the most fundamental reason. The combination of many factors has resulted in the current situation that the market has completed two weeks in two days.
Also, I am puzzled that the market has been pushing the yen out. The amount of overseas assets held by Japan is about the same as its own GDP, and BOJ has 1.2 trillion U.S. debts on its account. Who can shake it? The basis for the depreciation of the yen is doubtful. want to laugh. What money can be attracted to invest with Japan's outrageously low interest rates. What doesn't exist in the first place, where does it come from? You want to say that the Japanese have increased their investment in the United States. Japan has invested in the United States. Unfortunately, this year’s U.S. assets have fallen too badly. It's all about throwing more and buying less. Judging from the trend of U.S. dollar assets this year, unless you deposit U.S. dollars in a bank, you will lose money everywhere you invest in stocks and bonds. So I don't know if there are many Japanese assets invested in the United States. I only know that Japan's national pension fund has lost a lot. The Bank of Japan has sold 200 billion U.S. bonds this year...
I personally think that the current currency trend has nothing to do with the fundamentals.
The European data is so bad, the euro has nothing to do with these data. When you talk about fundamentals, I think it's a little funny, it's more like a catharsis of market sentiment. Although it is difficult to trade against the trend, once the bet is right, the psychology is very refreshing, and it is more psychologically satisfying. Dare to go all in with the trend, but do you dare to go all in against the trend? Can you still believe in yourself when the market goes against the trend? I'm an average guy, I can only trade in one direction, I've never seen anyone go short one day and long the next, smooth out every wrinkle in the chart and make every penny. But I have seen many people who quickly sell when the price falls today, and rush in to buy when the price rises tomorrow, and then lose all their underwear. Choose a direction, forward or reverse, otherwise the probability of being sweet at both ends is much lower than the probability of being beaten left and right.
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