GBPUSD - An Opportunity To Meet Magic 33I don't normally pay much attention to the forex markets, but a friend on Twitter went into a cable short last month, had some immediate success, and then more or less got stopped out when she went rippy rip to start July.
After looking at it 6 times, I think that my friend's bias that the pound is bearish is legit, but that it's too soon to get short.
The reason is, if you look at cable on the monthly, it ran out the COVID lows and has clearly been in a confirmed reversal for months.
Now, I don't believe in supply and demand zones. If you ask me, certain high price areas are where "supply" is as evidenced by distribution and certain low price areas are where "demand" is as evidenced by accumulation.
Hence, on cable, the 1.31 to 1.35 range is where the real "supply" zone is and it's the soonest place you're very likely to find genuine bearish reversals.
And the Petrodollar has been in a very strangely not-bearish position all year, which I outlined here when the propaganda machine tried telling us that Wagner Group was about to decapitate Vladimir Putin.
DXY - The US Petrdollar And The "Prigozhin Coup" In Russia
On the above note, if you crack in the phrase "China-Taiwan War Rhetoric" into the Brave search engine (Google Duck Bing only propaganda), you can find an article that points out that international propaganda outlets have suddenly started pushing heavily narratives about a war between China and Taiwan being close to breaking out.
What's really going on is that the Chinese Communist Party is about to fall, and since China is 5,000 years old, the largest country, and abundant in natural resources and skilled labour, everyone is circling the wagons, trying to figure out how to get control of China.
But Xi Jinping may just dump the CCP overnight instead, seizing the initiative in the chess match.
If that were to really happen, Xi would weaponize the 24-year-long persecution of Falun Gong by the Jiang Zemin faction, which much of the world's governments and corporations have been complicit in as they've courted the toads in Shanghai (Babylon) all these years.
So the situation is very geothermal. Very tectonic.
Very dangerous.
Things can happen any day, and they may happen any day. When that day comes, bond yields up, DXY up, gold down, equities down. VIX 80.
Limit down. Big gap limit down.
If you want to get long on risk assets right now, you need to be hedged long volatility
So, back to cable: If we zoom in on the weekly, we find ourselves quite the obvious spectacle:
Inside the most obvious "supply" zone is a weekly gap, that just so happens to sit at the Masonic 1.33.
If you want to have yourself a lol, then Google "Rishi Sunak 33" and click the images tab and look at what the state messagers ran for headline photos when he was appointed Prime Minister.
So, cable made a new high and that should be bullish. How can we go short, right?
This is actually sound logic, because if you go short over old highs you can get gapped and ran on and then liquidated, because the forex market makers are absolute lunatics and like to do this kind of thing.
But here's a super notable divergence between Cable and the DXY:
Since lines are just lines, just look at the blips that compose the farthest right portion.
Notice that cable made a higher high but DXY actually made a higher low?
This indicates that DXY is likely about to pump, or at least that Cable making a higher high is really a stop raid.
Moreover, look at the maximum "FAFO" that's emerged last week, which started in June, between the "Risk Free Rate" 10Y yield (ZN1 10Y TBond futures, an inverse representation of the yield) and the DXY.
Going back to 2022, this has never happened before:
Something is up for sure.
And so the call for this is simple.
Although there's no reversal pattern emerging yet on the cable hourly:
If we see one appear on Sunday, or especially Monday London or New York session, it's equitable to find a short to take out the mid June pivot.
You've got a potential 300+ pips on a raid back towards the June lows to set up a run to 1.33, which will net a potential 900+ pips if you do it right.
If you feel the idea is suspect, well, just take a look at ES SPX Futures, which just did really the same thing and will probably take the low this week:
I think the markets are set to decline heavily this year, which means risk off, USD up, something that I outline here:
SPX/ES - An Analysis Of The 'JPM Collar'
But I also think that we're about a month too early.
Well. Do give it your best.
