The Indian Central Bank has cut rates, and Reliance looks well bid. Should we buy Reliance here? My response is No. We will see another dip in this stock and let us look at it again at that time. If you have purchased this stock when it was around 1000, then you should look to get out on this rally. I would be surprised if it stays above 1480 for long.
Having failed at 1.6670 levels, the Pound has come off by over six big figures already. Question is whether we will see 1.5250 soon? There is not much of a doubt that GBP/USD is in a bear trend, and some might think that all we need now is an overlap of 1.5934 to call a direct test of 1.5250. I would like to be a bit more careful in making that call just now. What makes me cautious is the sideways drift from the top. I would really like to see it come down a bit faster than this. Let us see how Asia handles the currency and then decide the next trade.
The Forex markets have been known to be very liquid. But today the liquidity was at its lows. Spread on GBP/USD was 15 pips wide for a mere 10 million quote even when London was in full swing. I imagine this must have been the case even yesterday in NY time because the currency just tore straight up. Can you believe it, but Sterling was at 1.6715 on Oct 22, down to 1.5265 on Oct 24 and back here at 1.6670 on Oct 30? This is crazy! Anyway, I am still of the view that Sterling will come off a bit from here. We will probably see 1.6350 in the next few sessions. I know fortune favors the brave. But it will be the foolish who venture into thin markets with big positions.
I had looked for Euro to find good offers at 1.3045 levels and recommended a sell at 1.3037 with a stop at 1.3057. The currency did not even pause at either level and reached a high of 1.3294. Every once in a while we will encounter such a situation, and you need to be prepared for it. The lesson here is (a) trade a position size that will keep you in the game and (b) always keep a stop. The second point is especially important because many people think that a good analyst can ‘predict’ the market accurately most of the time. Unfortunately this is not true, What I am capable of doing is to give you a carefully evaluated report of what I think the market is likely to do. The key words are “think” and “likely”. True, I have been successful at calling lots of turns accurately. But there is no guarantee that the next call will be correct. So you really have to assume that every call I make is judgmental, and hence the amount you risk should be just what you can afford to lose on that trade, yet keep you ready to take the next call! Here is your chart on Euro for today with comments on it. Enjoy.