British Pound back in fashion
In our last Hedge Cuttings [Hedgehog members newsletter] we pointed out the unfolding structure in the British Pound…
“On the currency front, the pound is starting to exhibit action which could ultimately form a bottom and begin the slow trek back upwards, but it will be some considerable time before we are looking at switching back into dollars. The first of the three criteria needed to reverse the trend is now in place, but we need to see all three before looking for sustainable upside in this market. If all three criteria fall into place we could well be on our way again – a mirror image of the move down from 1.92? That would be nice, but it would take much longer going back up than it did coming down.”
OK, well everything did fall nicely into place and we had confirmation of a new uptrend on May 6th when the GBP-USD closed at 1.5149. It hung around in that area for a few days and finally gave us a nice impulse that we always like to see at a trend reversal point.
It is pretty overbought at this time, so we should expect a bit of short term consolidation now. (The first pullback to the 1.54-1.55 area would be expected to hold as support, if it even comes in that far.)
A new uptrend confirms that the Pound has a bottom in place and the long hard slog back up should take place over the coming months. As always we have no idea how far the new trend will take us, all we know for now is that the trend is up and momentum is increasing so for the time being higher prices are to be expected. Remember though that bull markets are much slower to unfold than bear markets, so we won’t be looking to switch back into Dollars any time soon.
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Copyright © Simon Townshend 2009, all rights reserved.
More gas
How ironic that a few days ago i was complaining about the persistent decline in the price of natural gas and yesterday we had a buy signal in this market that to be honest I rarely look at!
Occasionally it pays to be a bit agressive!
So here we are Long July Natural Gas from 4150. This is an agressive trade but with huge potential if it comes good for us. It is agressive due to this market being in a downtrend, but this signal gives us advance warning that a trend change may be starting to develop. Consequently it has a lower probability of success (perhaps 50% compared to the 80% we normally expect), but the risk/reward ratio more than justifies taking it. So lets see how it unfolds!
This is a signal from our S-I-R swing trading system that is being used for the forthcoming signal service (see the Trading Signals page).
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Copyright © Simon Townshend 2009, all rights reserved.
Follow Up: (June 1st) Our first trade was closed out for a small loss, as we require our trades to work immediately or we pitch them. However the setup was based on the expectation that the market would make a higher low, which so far it has done. So we bought again early this morning at 3852. To remain valid we now want to see 4690 taken out over the next few days.
Rip off Britain
Have you ever felt that you were being conned but not been able to quite put your finger on why you felt that way?
Well that was just how I felt when I received my last energy bills recently. Both the gas and the electricity bills were the largest we had ever received. No doubt we have all watched the news on and off over the last few years talking about rising energy costs, how scarce gas is becoming, how our suppliers are having to increase bills due to the spiralling wholesale prices etc etc.
Like me you may well have fallen for the sob stories and not looked into it any further? Taken for granted that we are being told the truth? With my bills hitting all time highs I just knew I was being ripped off and decided to look a bit harder. If you read any further you had better be prepared for one heck of a shock!
Here are the annual statistics on retail gas prices from the “Department for Business, Enterprise and Regulatory Reform”, showing the dramatic rise in prices we have all witnessed in particular over the last 3 or 4 years. This chart doesn’t even show the record breaking monster bills we have all been paying in 2009.
Wow with those sorts of price rises there surely must have been terrible rises in the wholesale gas price over the last few years. Those poor energy companies must have really been getting their margins squeezed, trying to absorb as much of the price rise as possible so as not to pass it all onto us angry consumers. I almost felt sorry for them struggling to operate in an environment with such runaway prices.
What a sucker!!! Those feelings instantly gave way to pure anger when I looked at the wholesale gas prices over the last few years. Imagine my surprise when I realised that gas prices:
- Are at their lowest level for 7 years
- Have fallen in the last year from 14 to just 3.5 (don’t ask me what the units are, but that’s a 75% fall whatever you measure it in!)
- Were at their highest in 2005 and rapidly fell from there
The true cost of gas has been going down just about as fast as our bills have been going up! We have been right royally shafted, swallowing all that hype hook line and sinker! Thanks for nothing Britain. Caveat Emptor!
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Copyright © Simon Townshend 2009, all rights reserved.
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