In the October 10th edition, the last item recommended selling the £. It has fallen quite heavily since then and we think it is time to take profits. These three charts provide the background and argument. The initiating signal was an extension in the important £-Euro pair, but we took this to mean that the £ could be sold against any currency and we chose the $. The moves in £-$ have been accurately caught by weekly-scale extensions since the drama of Brexit began in 2016 and the quick down-and-up whipping movements were captured by two extensions, as shown in the third chart. From experience, we know that this usually means that a trading range will form, roughly bounded by the high and low captured by these signals and so it is prudent to take decent profits whenever they arise, as is alway the case in ranges. We do not have a reason to reverse into a long £ position.
All signals courtesy of software supplied by our friends at Parallax Financial Research www.pfr.com