Friday, 24 June 2016
Amazingly, Britain has voted to leave the EU, bringing the anticipated down-spike in the security (and the world-wide markets).
What happens next? Answer: Nothing.
All the trade agreements and border controls remain the same for at least the next two years.
Nothing - except the uncertainty as to the future.
As the British Pound was already undervalued, there should, in the next few days, be a partial recovery from the down-spike, followed by a crawl back into my yellow box.
Wednesday, 22 June 2016
GBP/USD: Betting on Brexit Referundum
Pollsters say it is too close to call. Punters favour a Remain result. If the Brits vote to stay in the EU, we should see a considerable spike tomorrow evening into Friday (green triangle), followed by resumption of the upwards slope from a higher spot than present value. A vote to exit will bring a down-spike (red triangle), but this should be followed by a return to present levels, as the pound is under-value. My bet is on Remain..
Tuesday, 21 June 2016
Sunday, 19 June 2016
Wednesday, 15 June 2016
At present bouncing off the short-term Support Line, we can't be sure whether it will rise or fall.
The green box is the range (pointing upwards) within which the price is moving; but the red line is a long-term Resistance Curve.
The price may rise as far as the Resistance Curve, but no further, given the threat of an eventual rise in FED interest rate this year.
If the price turns downwards tomorrow and breaks through the short-term Resistance Line, it should drop rapidly towards the 5-year Support Line.
Monday, 13 June 2016
Anticipating a possible British exit from the EU, Great British Pound (red graph) has declined sharply for two years, not having recovered from its plunge in 2007/ 08. It now hits an all-time bottom.
Referendum day (23 June) is shown by the vertical bar. The pound fell sharply on Friday 10 June, as opinion polls show the Exit camp moving ahead of the Remains.
The economics all stack up against Exit, but the immigration issue is the factor bolstering the Exit camp. In 2015, net immigration into the UK was 333,000. Continue that trend for 20 years, with consequent increase due to births, would increase the population of Britain by over 7 million. Already there are 8 million of foreign birth in the country, out of a total population of 64 M.
Would leaving the EU solve the immigration crisis? As the polling date nears, the economic argument will become more persuasive and the actual referendum will be governed more by the head than the heart.
I think a bet on the GBP just before referendum day is warranted. Even if the vote is to leave, the pound has probably already fallen enough. The chart shows the EUR/USD in blue.
Monday, 6 June 2016
The all-time chart (showing the history of the Euro from its origins, against the US Dollar) will be upwards for the next year, unless the Brits vote to leave the EU, which could see a down-spike on or following 23 Jun 2016 (down-spike not indicated). The march up the hill is unlikely to be straight all the way, but have occasional regressions to the underlying slope-line.
Friday, 3 June 2016
Nasdaq is easing back today after hitting its predicted local peak. In the absence of any imminent move on the Interest front, I guess that the movement over the next three weeks or so will be along the path of my green arrow: Down a little, then Up a little, ultimately controlled by the 5-year Support Line and the brown Resistance Curve.
I predicted that the Euro would rise in advance of the BREXIT referendum and have a spike, up or down depending on the outcome, afterwards.
Today's spike tells me that the market is growing more confident of a positive outcome (i.e., the Brits voting to stay in the EU). There will be some profit-taking at this point, so the price should, in the next few days, ease or flop back to the shaft of my blue arrow.