- Until now, +USD view here has been expressed mainly vs -EUR. Time to change this given GBP/USD chart outlook.
- Monthly : Resumption of long term downtrend. Rally from 1.3498 in Jan09 to 1.7042 is merely a sideshow.
- Weekly : Ignore the 1.7042 spike high. Measure double top objective based on where the solid candlestick bodies are ie between the pink horizontal lines. Downside objective is [1.5705-(1.6719-1.5705)] = 1.4691.
- Going forward, will reduce short EUR into dips and sell GBP into rallies to increase risk here.
5 comments:
Hi TS,
This "sideshow" in the GBP from 1.35 to 1.70 made a friend of mine very happy last year. You see, he was making arrangements to move his entire family to UK for a medium-term period of about 3-5 years and was fretting over just how much of his NW he should convert to pounds, as well as the timing to carry out the conversion in.
He talked to me a little abt it, and with much (much!) caveats emphasized, I showed him the longterm charts of the pound and said he probably cant go too wrong by starting his conversion (in batches of 1/4 sizes) early last year, at around the 1.40 level.
[the idea being if in the scenario the pound continued to drop like a stone, he would had at least averaged-in abt 1.40 - high 1.3s;
and in the (better) scenario where the pound rebounded from 1.40 and stayed high, he would enjoy having converted the bulk of his required-pounds at a much lower rate.]
He started his conversion in early 09 and by june, had finished converting the pounds he needed. During the farewell party late last year, he was pleased as punch with the pound at year-high levels and his overall conversion rate obtained at year-low levels.
I was happy for him; but even happier that the not-so-good scenario did not happen. I might not have gotten the invite to the farewell party in that scene...
Hmmm... I wonder what, if anything, you are going to tell him now? Once involved, forever responsible?
Haha, well he's still ahead, with the GBP at current levels. And even if it reaches your downside objective of ~1.47, he will still be positive, though his gains would have been largely reduced.
But I hear what you're saying. Mixing friendship, family ties with fiduciary obligations almost always end in tears.
Actually 1.4691 is objective from the weekly chart only. If we do get such a move, project the damage that would have been done by such a move to the monthly chart and its not difficult to imagine much lower levels.
Definitely. If we reach and break 1.4691, likely to test even the lows of ~1.35 and when at that level, anything's possible...
But anyway for my friend, he is already way ahead and had averted the other even worse scenarios (eg: if he only start converting after June 09 at year-highs, averaging-in all the way down).
He has had the high-ground position of starting 2010 with the pound at near-highs, so had more room and options to work with already.
In any case, he is now a couple of continents and oceans away...he's on his own now.
:)
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