"Haha, what did I say? All the declines are merely the dying struggles of the short sellers in the market."
Seeing the British pound exchange rate return to the 1.5300 mark, in Hong Kong City, in the trading room of Huifeng Huanyu Hedge Fund's trading department, Godfrey's face was covered in a broad smile.
"Mr. Godfrey's judgment on the trend of the British pound exchange rate market is indeed precise," Gu Chijiang of Tianhe Capital praised with a smile. "The number of open long positions in the market has now exceeded 4.3 million lots, which indicates that during this period, large capital institutions in the market are continuously increasing their long positions. It seems that Mr. Godfrey's earlier statement about the Bank of England's plan to snipe Wall Street short-selling capital is indeed true."
Watching the British pound exchange rate successfully break through the 1.5300 mark.
At the same time, seeing the massive long positions held by his fund once again enter a full floating profit stage, the pressure on him instantly lightened, and his mood relaxed considerably.
It was just a bit regrettable that they couldn't continue to increase long positions below the 1.5200 mark.
This made him feel that it was slightly imperfect.
"After entering the European trading session, the trend of the British pound exchange rate was clearly stronger than in the previous Asian trading session," Sato of Mitsui Sumitomo Investment Company also said at this time. "Moreover, the rate of new long positions in the market is much faster than before. It seems... the Bank of England has already started to act."
"This time, the British pound exchange rate breaking through the 1.5300 mark should not fall back down," Godfrey said, his eyes sharp, still fixed on the rapidly changing British pound exchange rate chart. "I said before... Goldman Sachs' reversal from long to short can only affect market sentiment temporarily, but cannot change the market's inherent trend."
"With the British pound exchange rate showing this kind of trend..." Gu Chijiang said with a smile, "the major short-selling institutions in the market will probably be in a lot of trouble."
Sato laughed heartily and said, "To be honest, I'm just waiting for these major short-selling institutions to stampede."
"For the major short-selling institutions in the market to stampede each other into stopping losses, the British pound exchange rate probably needs to continue to break through the 1.5500 mark," Godfrey said.
Although he was in a good mood and his fund's long positions had considerable floating profits, he had not lost his composure, maintaining a very rational and calm thought process.
"However, once the 1.5300 mark is broken, especially with the rapid rebound of the British pound exchange rate from below 1.5200, it will definitely create immense psychological pressure for the major long-term institutions in the market. I estimate that at this position, under this trend... there aren't many major short-selling institutions, nor retail investors and speculative funds inside and outside the market, who would consider continuing to increase their short positions. In other words... the higher the British pound exchange rate rises, the lighter the market pressure it might encounter."
"It will certainly not be easy to make giants with extremely strong financial power like Huayin International, Aberdeen Asset, BNY Mellon, Blackstone Group, Goldman Sachs Group... stampede each other into stopping losses, but..." Sato paused, then continued with a smile, "Under the strong rebound trend of the British pound exchange rate, continuing to guide market sentiment and causing short-selling retail investors and speculative funds with less firm holding confidence in the market to cut losses, cover positions, and stampede each other, I don't think it will be difficult.
And the market's capital structure, as well as the long-short dynamic.
They are never isolated.
Once the confidence of short-selling retail investors and speculative funds in the market starts to collapse, and they begin to close positions and cover.
Then, with short-selling power in the market sharply decreasing while long power is rapidly increasing, it will certainly affect the trading decisions and holding confidence of these major short-selling institutional groups.
Not to mention forcing them to stop losses and cover.
At the very least, it's very possible to make them hesitant to easily continue increasing short positions, thereby suppressing the market."
"It feels like the current major short-selling institutions in the market are hard to be led by market sentiment," Gu Chijiang said. "The British pound exchange rate has risen above the 1.5400 mark before, but it didn't cause any strategic decision-making wavering among these major short-selling institutions in the market."
Godfrey said, "Before is different from now. At the previous point in time, the major short-selling institutions in the market were not panicked by the rapid rebound of the British pound exchange rate, because the announcement of the referendum results on the 23rd was still far off. They had ample strategies and methods to influence market sentiment and invest huge funds to guide market trends.
But now, there are less than 2 days until the referendum on the 23rd. Such market anomalies so close to the referendum date. Will lead to more speculation and greater expectations among the broad market of investors.
That is to say, at this point in time, it will not be so easy for these major short-selling institutions in the market to use public opinion to guide market sentiment. And if they cannot use public opinion to guide market sentiment changes. Even if massive funds are invested, it may be difficult to reverse the market's trend.
Furthermore, the more consistent the market's long expectations are, the greater the risk of short-selling.
Although these institutions claim to make a big gamble on the British pound exchange rate and have already reserved tens of billions of dollars in capital, in reality... under extremely high investment risks, they will also hesitate and dare not commit to full positions."
"Mr. Godfrey is right," Sato responded. "Whether it's Wall Street, our various Japanese financial group corporations, or investment companies in Hong Kong City, when making large investments in the foreign exchange market, there is bound to be a risk control system.
If the market trend continues to develop in the opposite direction of expectations. If market sentiment changes and reverse expectations continue to strengthen. Both long-holding institutions and short-holding institutions will fall into a very passive situation.
Therefore, if the British pound exchange rate continues to maintain an upward rebound trend, I also believe that these short-selling capital institutions in the market will not dare to massively trade against the trend and continue to invest more huge funds with high risks."
"So..." Gu Chijiang chuckled and said, "Are we really just one step away from defeating the major short sellers in the market?"
Godfrey nodded and said, "More or less."
"It will depend on the game between the Bank of England, a host of European capital, and Wall Street capital in the upcoming European and US trading sessions," Sato said. "Although theoretically, the last psychological defense line for major long-term institutions in the market should be around the 1.5500 mark, I estimate... if the British pound exchange rate can quickly break through the 1.5400 mark, at a time very close to the referendum day on the 23rd.
It will certainly cause internal panic among the group of short-position holders in the market. And it will most likely force major short-selling institutions with higher holding costs in the market to reduce positions, close positions, and stop losses.
And as long as a small portion of the major short-selling institutions in the market start to lose confidence, begin to adjust their trading strategies, and make covering and closing operations. Then, the 'domino effect' of a complete short-selling collapse will definitely occur."
"Then can we take the opportunity to aggressively squeeze the shorts?" Gu Chijiang suggested with a smile.
Although the large number of long positions held by the fund had already started to generate profits, he would definitely not be content with just this floating profit under an excellent short-squeeze opportunity.
Moreover, after the fund's long positions showed some floating profits.
The capital pressure he faced was also much smaller.
Possessing more reserve funds and account liquidity available for operation.
"I believe we can continue to squeeze the shorts and increase long positions," Sato said, his view also leaning towards a very optimistic direction. "The Bank of England and its government institutions daring to invest large amounts of real money into the market to snipe Wall Street short-selling capital is sufficient to show that the referendum result on the 23rd is basically 100% to remain in the EU, and it also indirectly confirms our previous speculation.
That is, this round of the Brexit referendum is a blackmail by the British government against the EU. A farce deliberately orchestrated to gain more preferential policies and benefits from the EU.
Moreover, after this logic is verified. Under the Bank of England's firm determination to maintain market exchange rate stability, and with the clearly improved outlook for the UK economy and economic recovery expectations in the foreseeable future.
The underlying logic for the sustained appreciation of the British pound exchange rate would then be unshakable.
That is to say, based on the underlying logic, regardless of whether these major short-selling institutions on the current market will stampede or not, it cannot change the continuous upward trend of the British pound exchange rate."
"Mr. Sato's logical analysis is truly brilliant," Godfrey nodded with a smile, the excitement in his eyes growing, and he exclaimed, "This is truly a feast!"
After speaking, his gaze returned to the British pound exchange rate chart.
He saw that during their discussion and analysis, the British pound exchange rate had already broken through the 1.5330 mark and was still continuing its upward breakout.
At the same time, the number of open long positions in the market was still surging.
While the number of open short positions was sharply decreasing.
This indicates that a large amount of new capital is aggressively going long to squeeze shorts, and a large number of short-position holders in the market are rapidly stopping losses and covering.
Witnessing this scene...
Godfrey no longer hesitated, his gaze falling directly on Gerald in the trading room, instructing him to direct the various trading teams to quickly squeeze shorts by going long, continuing to use account floating profits to increase long positions.
And the moment his trading order was issued, the Mitsui Sumitomo Investment Company trading center, which was linked with it.
As well as the main fund trading room of Tianhe Capital led by Gu Chijiang.
Were also carrying out the same operations.
Meanwhile, far across the ocean in London.
UBS International, Pacific Capital, Bank of England Foreign Exchange Trading Department, other major hedge funds under Huifeng Bank... were also massively investing funds to increase long positions in the British pound exchange rate.
"My heavens, this is crazy... the open long positions in the market have already surpassed 4.7 million lots."
Seeing the British pound exchange rate rebound wildly, once again hitting a new daily high, and rapidly approaching the 1.5350 mark, in the Cayman Islands, at the FXCM International headquarters, risk control department office, risk control monitor Angus was utterly flabbergasted and hastily reported to risk control manager Hubert: "Manager, looking at this situation, the open long positions in the British pound exchange rate market are heading towards a scale of 5 million lots."
"These open long positions are indeed a new record in the history of British pound exchange rate trading," Hubert lamented. "Such a massive number of positions means that the entire global active capital group in the foreign exchange market has crowded into the British pound exchange rate market."
"Not only that, I heard the Bank of England has also started to strongly intervene in the market," Angus said.
Hubert let out a breath and said, "With such a massive position size, even if the Bank of England strongly intervenes in the market, it will probably be difficult to dominate market trend changes."
"Hmm, I think so too," Angus nodded. "In the British pound exchange rate market, the increase in trading margins has not at all deterred the various funds' determination and intention to trade."
"Everyone knows that such a massive accumulation of positions will inevitably lead to extreme market movements and opportunities for huge profits. As speculative and investment capital groups with higher risk appetites in the forex market, how could anyone miss out?" Hubert said. "The referendum on the 23rd is truly attracting worldwide attention, and the outcome of this referendum... undoubtedly, will also determine the future destiny of Britain, a former hegemon."
"It will also determine the fate of our company, won't it?" Angus thought for a moment and said.
Hearing Angus mention this, Hubert sighed helplessly and said, "Yes, it will also determine the fate of our company. Currently, the net long positions in the market have surged to the millions of lots level. If, with longs completely dominating, the referendum result on the 23rd brings an unexpected turn, and an extreme market event occurs, causing too many long-holding accounts to blow up, I'm afraid the history of last year's 'Swiss franc black swan' will repeat itself. And this time, the position size is even larger. Once such an unexpected extreme event happens, it will instantly push our company to the brink of bankruptcy."
"There shouldn't be any surprises, right?" Angus said. "It seems... after the Bank of England increased market intervention, the shorts no longer have much opportunity."
"Who knows?" Hubert smiled. "No one can accurately predict history that hasn't happened yet."
Having said that, Hubert turned his gaze to the British pound exchange rate market.
To his surprise, after the British pound exchange rate had barely touched near the 1.5350 mark, the shorts unexpectedly launched an extremely strong counterattack against the trend.
A massive volume of short orders rapidly increased.
In an instant, short positions worth nearly 1 billion US dollars seemed to crash onto the market.
Immediately after, before many people could react.
The British pound exchange rate, under the impact of this massive short position, plummeted, flash-crashing by 50 points and falling back below the 1.5300 mark.
"What the hell, what's going on, who's short-selling?"
When the British pound exchange rate fell back below the 1.5300 mark with lightning speed, such a question instantly flashed through the minds of all long-holding institutional principals, as well as countless long retail investors and speculative funds in the market.
Of course, such a question.
Also arose in Su Yi's mind at this moment.
(End of Chapter)