"Heh heh, I told you it was a bear trap."
Seeing the GBP exchange rate rebound sharply after entering the European trading session, returning to the 1.5300 level, Godfrey chuckled in the 'Huifeng Huanyu Hedge Fund' trading room in Hong Kong City, saying,
"The more fierce the short sellers' counterattack, the stronger the market rebound will be. Now, the preliminary voting results for the June 23rd referendum are out, and everything is in line with expectations. As market trading time progresses, the short-selling institutional players in the market will only be left with death throes and stop-loss stampedes; there will be no chance for a strong counterattack."
"Mr. Godfrey's judgment is indeed accurate."
Hearing Godfrey's words, Sato from 'Mitsui Sumitomo Investment Company' said with a smile,
"It seems there will be no surprises in the June 23rd referendum results. It's estimated that under the influence of these preliminary voting results, major Wall Street short-selling institutions like BNY Mellon, Citibank, and Blackstone Group probably won't dare to continue increasing their short positions."
"I estimate these major short-selling institutions will mostly execute stop-loss liquidation operations."
Gu Chijiang of 'Tianhe Capital', which also linked up with 'Huifeng Huanyu Hedge Fund' in the GBP exchange rate market, also smiled at this time, saying,
"On the news front, it's not just the expectation of the June 23rd referendum results rapidly shifting towards the long side; related expectations for the Bank of England's subsequent monetary policy are also rapidly leaning towards the long side."
"The involvement of these major Wall Street capitals, BNY Mellon, Citibank, and Blackstone Group, in the GBP exchange rate market, should not be very deep at present, right?"
Gerald, head of the trading team at 'Huifeng Huanyu Hedge Fund', thought for a moment and said,
"At this time, with market sentiment, expectations, news, and capital all leaning towards a consistent long expectation, it's certainly not too late for these major short-selling capitals to withdraw immediately."
"As long as these major short-selling capitals change their trading strategy and start stop-loss liquidation... the short-selling power in the market will inevitably collapse and create a stampede."
Sato said.
"In fact, no matter how BNY Mellon, Citibank, and Blackstone Group choose their next trading strategy, they cannot change the trend of increasingly consistent market long expectations. In fact, among all Wall Street capital, besides these short-selling capitals like BNY Mellon, Citibank, Blackstone Group, and Aberdeen Asset... most other institutions are also bullish."
Godfrey said confidently.
"Mr. Sato, the market's net long positions have re-broken through 900,000 lots."
While the group was discussing, Yamamoto Hisaichi, a core trader at 'Mitsui Sumitomo Investment Company', who had been watching the GBP exchange rate movements, reported,
"Moreover, the number of outstanding short orders in the market has sharply decreased by over 70,000 lots within the past half-hour, which indicates that existing short positions in the market are being heavily covered."
Sato nodded slightly,
"Hmm. The market trend is becoming clearer and clearer."
Gu Chijiang said with a smile,
"I hope that before the June 23rd referendum day, we can seize this shift in market news expectations to push the GBP exchange rate above the 1.5500 level in one fell swoop.
Only by quickly pushing the exchange rate above 1.5500 can we trigger panic among short-selling capital led by institutions such as 'Huayi Capital', 'Huayin International', and 'Aberdeen Asset', and truly force the main short-selling institutions in the market into a desperate situation."
"I think achieving this goal shouldn't be a big problem,"
Godfrey responded.
"Mr. Godfrey, the latest market news from headquarters."
Just as Godfrey was pondering the subsequent trend of the GBP exchange rate, Ernest, head of the market research department, knocked on the door and walked into the trading room, reporting with a smile,
"I hear the Bank of England plans to formulate a strategy to increase its open market operations."
Godfrey was in high spirits and said with a smile,
"Excellent! Then let's go for it again."
Saying that, he quickly issued instructions to Gerald, telling him to direct the trading teams in the trading room to continue opening long positions near the 1.5300 level, increasing the fund's long positions.
At the same time, as he issued the trading instructions.
The 'Mitsui Sumitomo Foreign Exchange Investment Fund' managed by Sato, and the main fund of 'Tianhe Capital' managed by Gu Chijiang, also increased their positions simultaneously, forming continuous short squeezes against the short sellers in the market.
And at the same time...
Numerous global asset management institutions, such as 'Pacific Capital' Hedge Fund Trading Department, 'Paris Investment Bank' Foreign Exchange Trading Department, 'Hashimoto Asset' Foreign Exchange Trading Center, etc., were also performing the same operations as 'Huifeng Global Huanyu Hedge Fund', 'Mitsui Sumitomo Investment Fund', 'Tianhe Capital', and other institutions.
Thanks to the increased long positions by these institutions.
At 6:00 PM Beijing time, the GBP exchange rate effectively broke through the 1.5300 level, pushing the intraday high to near 1.5320 in one go, rebounding over 100 points from the intraday low.
Furthermore, due to the news catalysts and the stimulation of actual market movements.
Many individual investors and speculative groups gathered on various online forex investment communication platforms also began to widely cut their losing intraday short positions and aggressively open long positions.
"This rebound is really strong, 100 points effortlessly."
"The 1.5300 level was lost and then regained; the shorts were precisely targeted by the longs!"
"I originally thought that when the GBP exchange rate fell below 1.5300, especially after a sharp low open and rebound this morning, only to fall back near 1.5200, it was the start of a major long rout. I never expected... this to be a huge bear trap, causing all my intraday short positions to be stopped out. What heavy losses!"
"After the market entered the European trading session, the existing short positions in the market sharply decreased quite a bit!"
"Otherwise, how would you call it a bear trap?"
"This strong rebound in the GBP exchange rate over the past two hours, was there some news stimulus?"
"I heard that the preliminary vote count results for the June 23rd referendum are out, but this news... doesn't have a definitive disclosure channel, it's just been circulating as a rumor."
"So early, the preliminary vote count results are already out?"
"Thursday is the June 23rd referendum day, so it's not early, is it?"
"Although this news is a rumor, it certainly didn't come out of nowhere, especially since the long positions in the market have increased significantly in the past two hours."
"It feels like the long institutions in the market are increasing their positions."
"If the preliminary vote count results show a majority in favor of remaining in the EU, does that mean the referendum result on Thursday won't change?"
"Most likely, it won't change."
"In that case, aren't the short-selling institutions in the market with heavy short positions in GBP finished?"
"It's too early to say 'finished', but it's definitely not easy for them to withdraw."
"Alas, it seems the battle over the GBP exchange rate is truly becoming General Manager Su's 'Waterloo'. I wonder how the 'Huayi Chengyuan No. 1' main fund, managed by General Manager Su, will respond to this situation?"
"It's not just 'Huayi Capital' as a single institution."
"That's right, according to current market news, the combined short positions held by 'Huayi Capital', 'Huayin International', and 'Aberdeen Asset' - these three core short-selling capitals - have already exceeded 700,000 lots. This scale... already accounts for nearly 22% of the market's existing short positions, which means even a concentrated stop-loss would be quite difficult."
"Don't just be bullish when it rises and bearish when it falls, alright? The current trend of the GBP exchange rate has not deviated from a volatile situation. The main short-selling institutions in the market, led by 'Huayi Capital' managed by General Manager Su, don't seem to have been severely pressured by the longs.
It feels like the outcome between bulls and bears in the market is still undecided, and the uncertainty of which direction the GBP exchange rate will truly break out next is still very high."
"Although the current trend is still volatile, the market expectation trend has changed!"
"Exactly, price reflects expectations. Since expectations are fully leaning towards the long side, a unilateral breakout of the price trend towards the long side is also highly probable."
"I don't think so, I still believe in General Manager Su."
"Didn't they say that the vote counts in many parts of Scotland haven't come out yet? It's indeed a bit premature to draw conclusions now, isn't it?"
"The market's net long positions are already approaching 1 million lots again."
"Although it's not the final moment, the market trend is clear. Anyway, I don't dare to hold onto my short positions anymore; I've already stopped out."
"Let's see the trend during the US trading session."
"I estimate that during the US session, the market trend will still maintain a bullish stance."
"Why do I feel that the probability of an unexpected outcome for the June 23rd referendum is still quite high?"
"The intraday players in the market, especially those who just played the rebound, must have a lot of floating profit, right? Will there be profit-taking and pressure for intraday long positions to be covered?"
Accompanied by intense discussions among a large number of individual investors on domestic and international online investment communication forums.
It could be seen that...
The market's sentiment between bulls and bears was indeed leaning towards the long side.
However, regarding bullish and bearish views, although bullish views dominated, bearish views still existed, and there were still quite a few disagreements in market sentiment.
Similarly, when the GBP exchange rate crossed the 1.5300 level.
As trading time progressed and it continued to rebound upwards, the upward pressure also became increasingly significant.
This indicated that the inertia of intraday traders in the market still existed.
A considerable number of intraday speculators, while holding floating profits, generally reacted by believing that the GBP exchange rate trend was within a huge volatile range, and did not believe that the large dormant long and short main capital groups in the market could fight to the death and trigger an extreme unilateral market trend before the June 23rd referendum results were truly announced.
Moreover, when the market's trading time entered the US trading session.
After a strong rebound in the European session, stimulated by news and sentiment, the GBP exchange rate struggled to climb above the 1.5350 level.
Under the full fermentation and reaction of intraday news and sentiment.
The GBP exchange rate trend, however, did not continue to recover the 1.5400 level with the help of active US market funds, as many major long institutions in the market generally expected.
Instead, it showed a relatively weak surge-and-retreat trend, falling back to near the 1.5300 level at the beginning of the US session.
"What's going on? Market news and sentiment are both supportive, so why can't it break through?"
Seeing the GBP exchange rate trend, after entering the US trading session, not only did it not continue its strong upward ascent but instead showed a surge-and-retreat movement, Cedric, the fund manager at 'Amanda' Hedge Fund Trading Department, 'Vanguard Capital' Group, in New York Wall Street, visibly frowned at this time, unable to help but complain.
"The bullish impact isn't strong enough, and the main short-selling forces entrenched in the market haven't covered their positions on a large scale. This has caused the market trend to struggle to escape the volatile pattern."
Guy, the head of hedge fund asset management business, was quite calm at this time, smiling and saying,
"Cedric, don't be so anxious. As long as the market is moving in our predetermined expected direction, the final victory will inevitably belong to us."
"Mr. Guy..."
Just as Guy was comforting Cedric, Bella, a researcher in the market information department, hurriedly reported,
"According to the latest information we've obtained, Mr. Humphrey of 'Blackstone Group' has not only not covered his previous short positions but is also continuing to add to them."
Guy sighed,
"This guy... Like Frederick of 'Aberdeen Asset', he's a gambler."
"What about Citibank?"
Cedric asked.
Bella responded,
"There's no movement from Citibank yet; they're probably still observing."
Cedric wondered,
"Could it be that... these institutions believe there will still be unexpected circumstances in the June 23rd referendum results? That shouldn't be the case; according to our expectations, Humphrey should be covering his positions and stopping out immediately. Could it be that this guy is really determined to make an unrealistic gamble in the GBP exchange rate market, just like Frederick of 'Aberdeen Asset'?"
Guy's brows only now furrowed, and he said,
"Citibank not closing out their positions is also somewhat surprising. Mr. Enoch of Citibank has always been known for his steady style in foreign exchange market investment and trading. Why is he so intent on shorting this time? What is he worried about?"
"I heard that Salmond, the current First Minister of Scotland, is planning an independence referendum for Scotland."
Just as Guy was frowning, utterly perplexed, trader Caroline's reminder suddenly pierced the long dark sky like a fierce flame, shocking Guy's heart and instantly clarifying the confusing thoughts in his mind.
Guy's eyes became sharp again,
"So that's it. Salmond, I had the good fortune to meet him once; he is indeed an old stubborn man and difficult to deal with. Judging from this logic... it seems that Enoch of Citibank's concerns also have some truth to them."
(End of chapter)