The Good Old Days of FX Trading - 1986 Style

A reminder for some of us older folks, and some eye-opening for some of the younger ones.
The following links are to a documentary about FX Trading from 1986.

The top video clip is a the short 5 minute version.



For those who wish to see the full 30 minute documentary, click below:




Some of the highlights:

• 10 point spreads. 
• Phoning your overseas office before leaving home to tell them you plan to bash the currency lower when you get in.
• Overt price manipulation as part of normal activities.  
• Phoning on a handheld phone.
• Smoking in the office.
• No bonus (Commission) for trading.
• Barclays known as a sleepy high street bank. 
• Surprise that a trader is earning more than a high street bank manager. 
• The use of the term City Gent.
• A bank even allowing the cameras in to see its activities and allowing its name to be used.  
• Chemical Bank (For those younger viewers, a giant of its day, and eventually merged to become a significant part of JP Morgan Chase)
• Some of the names on the Reuters terminal. E.g. 'Coco Cop' and of course the BFT Moscow.
• Using a pager.
• Cassettes in cars - and the Wall Street Shuffle.
• Overt price manipulation.  
• NO CHARTS 
• NO INTERNET or EMAIL ANYWHERE, People spoke to each-other.

But what is also clear, is that cutting through the Social, Technical, Cultural and Fashion Changes, is how little has really changed and how much is still the same.

Fx Update - S&P Long-term Candles.

EURUSD fx

The EURUSD failed miserably close to, but not at the 1.4285 level is was looking for as a key pivot. Since then it has sharply returned to test the prior breakout level in the low 1.4000s. 1.4000 - 1.4300 is broad pivotal range for the EURUSD moving forward. - A clear break below 1.4000 would now kill the upside view in my opinion, leaving open the possibility of a serious correction, at a probable minimum to the mid 1.3000s, and a move much below there opening the possibility of a much deeper move. - On the other hand 1.4000 holding, keeps the upside to the high 1.4000s very much in sight, though a break soon over 1.4300 will need to occur.

GBPUSD fx

Cable failed even more miserably than the EURUSD.  Price action has been messy between 1.6000 to 1.6400, with a minor break below 1.6000 thus far.  I am uncertain on GBPUSD direction in the wake of this price action, and will wait on the sidelines before expressing any thoughts on this.

SP500 - Long-term charts.

I have not really commented on the SP500 for some time. I am planning to focus on this a little more in the coming weeks. I have started by looking at the long-term picture. The first thing that jumps out at me is that this wild month may be about to produce a rare monthly 'Hanging Man' Candle pattern . These candles can be significant, suggesting strong selling pressure during the period concerned, but equally a strong recovery. They tend to be pivotal, though subsequent price action has to be considered to determine their effect, this means they raise warning flags, as opposed to giving a clear signal.  I have looked back over the S&P over the past 40 years to see the effects of previous candles. The top chart below shows the S&P500 since the last 1960s on  LOG-SCALE (Which allows earlier price action to retain a greater perspective). I have identified 8 prior Hanging Man candles, (The criteria was that they had to occur after or during a significant uptrend, and had to be sufficiently large relative to the price action around them.). The first chart
highlights this potential candle formation.

The next chart shows the S&P500 over the past 40 uears on a Log Scale, with the 'Hanigng-Man' Patterns highlighted.

Zooming in slightly to see the examples in more close-up detail. The chart below shows the period in the first half of the above chart. The 4 occurrences in this period saw 2 reversals, 1sideways range, and 1 very sharp rally.

The next chart shows the close-up look for the second period of the upper chart. The 4 occurrences here saw 2 significant advances, though 1 occurred after a misleading correction, and 2 very significant corrections, but on both these occations the high was re-tested first.

The point of what I am saying here is not to provide clues as to where we head, rather to say that a flag to a possible significant move higher or lower starting in the next couple of months may be being raised. - Note however that the hanging man has not yet been confirmed, it will depend on Thursday's close, however, it will need a large move from here in the 2/3 days to change this. - Saying that, and given how this month unfolded, one can not discount a large move in the next 2/3 days.......