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Sterling Set For Rise As Techicals Point Up

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http://www.bloomberg.com/news/2010-10-14/pound-to-extend-gains-to-eight-month-high-on-fibonacci-technical-analysis.html

Pound to Extend Gains to Eight-Month High on Fibonacci: Technical Analysis
By Ron Harui - Oct 15, 2010 12:23 AM
The pound may extend gains to an eight-month high of $1.6340 after it rose above major resistance between $1.5969 and $1.6018, according to Forecast Pte, citing trading patterns.
The $1.5969 level is 61.8 percent retracement of the U.K. currency’s fall from the November high to the May low, based on a series of numbers known as the Fibonacci sequence. The $1.6018 level is the Oct. 7 high, while $1.6340 represents resistance on a descending trend line that connects the highs of November 2009 and August this year, said Pak Lai Ng, a technical analyst at Forecast.
“Sterling is in an uptrend and will head toward that trend line,” said Singapore-based Ng in an interview. “
Everything is still positive
.”

Looking at recent fundamentals, the technicals woud seem to be wide off the mark:

1. Significant rise in part-time employment as higher paying jobs are shed

2. Growing job losses in private sector (HP, Lloyds)

3. HPC ( :D ) gather momentum

4. Exports faltering

5. Sentiment at lowest level in 18 months according to most recent NW survey

6. 5TR in government debt

7. 50,000 companies on the edge (http://uk.finance.yahoo.com/news/spending-review-puts-50-000-companies-at-risk-warns-begbies-traynor-tele-4adc62b40bde.html?x=0 )

8. And the cuts haven't really begun yet.

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http://www.bloomberg.com/news/2010-10-14/pound-to-extend-gains-to-eight-month-high-on-fibonacci-technical-analysis.html

The pound may extend gains to an eight-month high of $1.6340 after it rose above major resistance between $1.5969 and $1.6018, according to Forecast Pte, citing trading patterns.

Probably means Pak Lai Ng or his employer has a shed load of Sterling tucked away that they want to sell, if this was a realistic proposition I suspect they'd keep very quiet while buying Sterling, I know I would.

Current Sterling rises seem to be more due to bad US news rather than good news for the UK.

Edited by madpenguin

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The $1.5969 level is 61.8 percent retracement of the U.K. currency’s fall from the November high to the May low, based on a series of numbers known as the Fibonacci sequence. The $1.6018 level is the Oct. 7 high, while $1.6340 represents resistance on a descending trend line that connects the highs of November 2009 and August this year, said Pak Lai Ng, a technical analyst at Forecast.

As if you can actually use a simple mathematical formula to predict a major currency movement, if it were as easy as that then noone with an internet connection would ever have to bother working again. I suppose this guy is peddling some ******** investment newsletter ?.

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Snip

We have problems no doubt. We are at least attempting to deal with though. The cuts are coming will have to last a decade or 5 to pay back all that borrowed cash.

The US has similar debt issues. Currently there seems to be no plan to repay any of it. 1.5trn deficit per year, no plans for cuts. Plenty of plans to crank up the printing presses. No long term economic strategy other than print and spend to infinity. The $ will probably crash and be replaced by some other form of reserve currency that can't be printed.

Eurozone has major structural issues trapping southern Europe in recession and debt deflation whilst Germany booms. No devaluation possible by these countries to combat German efficiency. No economy in history has recovered from the problems face by Greece, Ireland, Spain etc without a massive devaluation. There is no long term plan to fix any of this. The idea seems to be to hope for the best / keep lending money until southern Europe implodes.

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As if you can actually use a simple mathematical formula to predict a major currency movement, if it were as easy as that then noone with an internet connection would ever have to bother working again. I suppose this guy is peddling some ******** investment newsletter ?.

IMO technical analysis is about as useful as a horoscope. They cover every base and if the prediction doesn't pan out it is because the oscillator was wobbling due to retrenchment waves.

IMO, the speculators push one currency and then another without regard to fundamentals. Much like micro-second stock trading--its all about momentum buying and selling with alogrhythms determing when to buy or sell.

Edited by Realistbear

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Rising sterling is great news IMO.

If no HPC comes along soon, my plans very much involves buying or moving abroad.

We of course have our problems but I'd rather be in Sterling today than USD or EUR.

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As if you can actually use a simple mathematical formula to predict a major currency movement, if it were as easy as that then noone with an internet connection would ever have to bother working again. I suppose this guy is peddling some ******** investment newsletter ?.

I honestly thought the mention of Fibonacci was satire when I first saw it!

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Rising sterling is great news IMO.

If no HPC comes along soon, my plans very much involves buying or moving abroad.

We of course have our problems but I'd rather be in Sterling today than USD or EUR.

No expert but Sterling is only rising against the Dollar, with the Euro it's back down where it was in April 1.13840 according to the BBC website.

Suspect this has way more to do with worries about the US than any perceived strength in Sterling

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IMO technical analysis is about as useful as a horoscope. They cover every base and if the prediction doesn't pan out it is because the oscillator was wobbling due to retrenchment waves.

IMO, the speculators push one currency and then another without regard to fundamentals. Much like micro-second stock trading--its all about momentum buying and selling with alogrhythms determing when to buy or sell.

Mandelbrot has shown that fx movements are a random walk with memory. He found that some of the memory effects could go back 50 years. This would imply that there is some validity to technical analysis, but we have not developed the right tools yet, imo.

Mandelbrot reckons that the secret has something to do with time shifting (fast time and slow time), and that the best traders have an instinctive understanding of this phenomenon..

I do agree with you however that presently used technical analysis tools are a bit like voodoo, and most of them are ancient, crude techniques by today's standards. Most technical analysts could probably achieve the same track record by chanting a few incantations and throwing bones on the floor.

Edited by Toto deVeer

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Mandelbrot has shown that fx movements are a random walk with memory. He found that some of the memory effects could go back 50 years. This would imply that there is some validity to technical analysis, but we have not developed the right tools yet, imo.

Mandelbrot reckons that the secret has something to do with time shifting (fast time and slow time), and that the best traders have an instinctive understanding of this phenomenon..

I do agree with you however that presently used technical analysis tools are a bit like voodoo, and most of them are ancient, crude techniques by today's standards. Most technical analysts could probably achieve the same track record by chanting a few incantations and throwing bones on the floor.

Toto, do you have any good links to this work?, I'd be keen to read more

Edited by madpenguin

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Mandelbrot has shown that fx movements are a random walk with memory. He found that some of the memory effects could go back 50 years. This would imply that there is some validity to technical analysis, but we have not developed the right tools yet, imo.

I always thought Mandelbrot's main message was that you can emulate system behaviour but you can't use that as a prediction tool...

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I always thought Mandelbrot's main message was that you can emulate system behaviour but you can't use that as a prediction tool...

I didn't intend to say that Mandelbrot supports technical analysis as a prediction tool, only that his verification that behaviour has memory implies that technical analysis may have merit.

The final chapter(s) of his book develop his latest thoughts and models towards price movements in markets. I don't think that he proposes them as a prediction tool, more of a risk mitigation and probability of outcome tool.

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You learn everything by comparing two currencies. Except that they are both sliding down the pan.

-1

The key is to back the one that is sliding down slower.

If you already into CABLE trades the only 2 currencies that matter are £ vs. $.

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Considering the huge amount of money in the FX markets today, the currencies of the smaller economies will be impossible to predict.

Soros destabilized Sterling with about $2 billion in the early 1990's. Now $trillions could be employed instantaneously by computer algorithms to achieve the same purpose.

Kind of like standing on the edge of a crumbling cliff face, staring into the abyss, and hoping that there aren't any other lemmings behind you...

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-1

The key is to back the one that is sliding down slower.

If you already into CABLE trades the only 2 currencies that matter are £ vs. $.

Just make sure you put your gains into something that is holding it's value, or you are a loser who thinks he's a winner.

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http://www.bloomberg.com/news/2010-10-14/pound-to-extend-gains-to-eight-month-high-on-fibonacci-technical-analysis.html

Pound to Extend Gains to Eight-Month High on Fibonacci: Technical Analysis
By Ron Harui - Oct 15, 2010 12:23 AM
The $1.5969 level is 61.8 percent retracement of the U.K. currency’s fall from the November high to the May low, based on a series of numbers known as the Fibonacci sequence. The $1.6018 level is the Oct. 7 high, while $1.6340 represents resistance on a descending trend line that connects the highs of November 2009 and August this year, said Pak Lai Ng, a technical analyst at Forecast.

What we are looking at here?

The Fibonacci Series?

As we all know the fibonacci series approaches a certain figure when you divide two consecutive terms.

What is that figure?

it's the GOLDen ratio of course!

And that means the stuff to buy is gold!

Join us next week for more 321pi-e2

200px-321_ted_with_bin.jpg

Edited by noodle doodle

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  • 146 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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