"What the f***, what's going on? Another flash crash."
Witnessing the GBP exchange rate plummet like floodwaters bursting through a dam, instantly breaking through market support with overwhelming force, traders holding long positions in GBP and hoping for a rebound after hitting the day's low on online communication platforms where global forex investors and speculators gathered, couldn't help but exclaim in surprise.
"The bulls are clearly still dominating the market, and the overall open interest is still in a net long position, so why is the exchange rate still falling sharply?"
"Didn't they say the Bank of England had intensified market intervention, dumping tens of billions of dollars in foreign exchange reserves to prop up the market?"
"Looking at the GBP exchange rate trend, it doesn't look like there's any good news!"
"Alas, is it really impossible to return to the previous consolidation platform?"
"Damn it, I just opened a long position ten minutes ago, and now it's already hit my stop-loss. I'm speechless."
"Looking around, the entire GBP exchange rate market is full of good news, so why is the exchange rate moving contrary to the news? Is Wall Street's short capital that fierce? Even the strong intervention by the Bank of England can't stop the market's decline."
"Looking at this situation, it won't break below the 1.5000 mark, will it?"
"The GBP exchange rate's volatility is truly massive, with swings of one or two hundred pips at any moment."
"This is clearly heading straight for the 1.5000 mark. If it breaks below the 1.5000 mark... the many major long institutions in the market might trigger a stop-loss stampede, right?"
"No need to break below the 1.5000 mark, I want to cut my losses now."
"Wall Street's short capital is still too fierce. I previously thought everyone was targeting 'Chinese-funded institutions', but now... it's clearly the Bank of England they're targeting!"
"Is history going to repeat itself?"
"The GBP exchange rate tonight won't replicate the market trend of the 'Swiss franc Black Swan' night, will it?"
"Hard to say, with this market trend, holding onto long positions is making me increasingly nervous."
"Yes, I also feel this trend is precarious."
"It all depends on whether the 1.5000 mark can hold. If it can, the bulls still have a strong chance to counterattack. If it continues to break lower, then long positions will truly need to be stopped out unconditionally."
"I feel it should hold, isn't it said that tomorrow's referendum results... will basically have no surprises?"
"In financial markets, what's certain? For things that haven't happened, who knows what the outcome will be? What if?"
"The referendum results might have no surprises, but unexpected situations can still occur with the GBP exchange rate. Good news can turn into bad news once it's priced in!"
"You have a point, alas... I really shouldn't have gone long above 1.5200. Now I'm down 200 pips. The key is that if the 1.5000 mark doesn't break, there's still a chance for the bulls to counterattack. I want to cut my losses, but I can't make up my mind. But if I don't stop loss and keep holding, I'm afraid a sudden drop will lead to even greater losses."
"Anyway, I've flipped from long to short."
"Didn't they say 'UBS International' has also started closing out its long positions on a large scale?"
"It's not just 'UBS International'; as far as I know, many previous long institutions are continuously reducing their holdings."
"Haha... Everyone was mocking Chinese-funded institutions before, but I didn't expect them to stand on the same side as Wall Street's short capital this time."
"This was indeed a bit unexpected."
"However, shorting at this level should also carry significant risk, right?"
"At this level, both shorting and longing carry significant risk. After all, such a large scale of long and short positions has accumulated in the market. Once one side completely loses balance and stampedes, the GBP exchange rate will either experience an extreme surge or an extreme crash."
"In other words, huge risks are also accompanied by huge potential profits."
"Risk and profit go hand in hand, that's for sure."
"Forget it, forget it. I've hit stop-loss three times in a row, I'm not gambling anymore. I'll just watch the show and see how this long-short battle unfolds next."
Amidst the fierce discussions among numerous retail investors and speculative funds in the market, the GBP exchange rate continued to approach the 1.5000 mark, and the market's net long positions had further sharply decreased to around 250,000 lots.
"President Gu, the GBP exchange rate has reached near the 1.5000 mark."
As the GBP exchange rate trend began to lean further towards the short side, and numerous retail investors and speculative funds in the market started to stop-loss their long positions, with the overall long sentiment in the market clearly waning, in Hong Kong City, inside Tianhe Capital, trading team manager Xie Hongxing frowned, unable to resist reminding Gu Chijiang once more:
"Our fund's overall holding losses are still within an acceptable range, and although the long sentiment in the market has weakened, it hasn't reached a state of collapse or mutual stampede yet.
We still have time to reduce our positions, close out some long positions, and lower our holding risk. If we wait until the GBP exchange rate effectively breaks below the 1.5000 mark, it will inevitably trigger a collapse in long sentiment and a stop-loss stampede among many long holders.
In that situation... with a sharp reduction in market long absorption and continuous selling pressure from shorts, I'm afraid we would have to pay an enormous price to close out and stop losses."
"Do you think the GBP exchange rate won't hold the 1.5000 mark?" Gu Chijiang asked.
Xie Hongxing replied: "Looking at the market trend, it's clear that the Bank of England's intervention measures have not been able to reverse the trend of global capital rushing to sell off the pound.
Moreover, the preliminary vote count results announced by the city of Leeds were significantly below the expectations of major institutions. This has already cast a shadow of uncertainty over tomorrow's referendum. And once various speculative and investment funds in the market change their expected outcome for tomorrow's referendum, then the short institutions, led by 'Wall Street capital', will short even more aggressively to suppress the market, completely igniting a stop-loss stampede among long institutions.
Furthermore, the market trading hours are about to enter the US trading session. Based on previous GBP exchange rate trends, the GBP exchange rate basically shows a downward trend during every US trading session. This also confirms that the main short players in the market are short institutions led by 'Wall Street capital'. Based on these changing factors... President Gu, I believe it will be very difficult for the GBP exchange rate to hold at the 1.5000 mark."
"But closing out positions and stopping losses on a large scale at this level..." Gu Chijiang frowned, hesitated for a moment, and said, "I'm still a bit unwilling!"
Although their fund's current long position losses are still within an acceptable range, the amount of loss has already reached tens of millions of dollars.
With the GBP exchange rate not yet having completely broken below the critical long support level of 1.5000, and with the referendum results not yet out, and the Bank of England still heavily intervening in the market, as well as the major long institutions in the market still possessing strong counter-attack power, he was truly a bit reluctant to reduce positions and stop losses at this level while incurring losses.
However, he couldn't deny that Xie Hongxing's analysis just now indeed made some sense.
"Reducing positions at a loss is indeed a bit regrettable," Xie Hongxing said, "but we still must respect market trends and keep operational risks within an acceptable range."
"Alright!" Gu Chijiang, after half a day of hesitation, finally nodded.
Xie Hongxing received Gu Chijiang's approval, nodded slightly, and quickly issued trading instructions to the various groups of traders in the trading room to close out and stop-loss part of their long positions.
Following the issuance of the relevant trading instructions...
The traders quickly closed out their positions with market orders.
However, just after Tianhe Capital, at a critical moment, succumbed to holding pressure and was forced to reduce some of its long positions, at 8 PM Yanjing time, as the European trading session neared its close, Birmingham, another important British city, also announced its preliminary vote count results.
According to the preliminary results, nearly 60% of the city's total votes favored remaining in the EU.
This performance significantly exceeded the expectations of previous institutions, making the shadowed prospects for tomorrow's referendum results clear once again.
After all, Birmingham has a population of nearly one million, while Leeds has just over 700,000, which meant that Birmingham's additional votes in favor of remaining in the EU were enough to offset Leeds's votes for Brexit.
"Haha... I knew it was just a false alarm, the market sentiment is still completely biased towards the long side."
After learning of Birmingham's preliminary vote count results, in the trading room of 'Huifeng Global Hedge Fund' in Hong Kong City, Godfrey, who had been tense, instantly relaxed.
Without taking time to compose himself, he quickly turned to Gerald, the head of the trading group, and ordered:
"Go long, go long, continue to buy long positions in GBP. There will definitely be a very strong expectation repair at this level."
Gerald nodded upon hearing Godfrey's words and quickly instructed the traders to continue increasing long positions.
And just as the traders were rapidly buying and increasing long positions, with the spread of Birmingham's preliminary voting results, unusual movements had already occurred in the GBP exchange rate market.
The GBP exchange rate, after touching a low of 1.5013, suddenly rebounded sharply, rocketing up over 140 pips in a direct counter-attack, and in just two to three minutes, it had returned to the 1.5150 level.
At the same time, almost instantaneously, a large volume of short covering caused the net long positions in the market to surge rapidly back above the 500,000 lot mark.
"Damn it, what the hell, stopped out on longs, stopped out on shorts too."
Facing the extreme volatility of the GBP exchange rate, many intraday speculators at this moment expressed similar helpless sentiments.
As for Gu Chijiang, who had suffered significant losses near the 1.5000 mark by insisting on reducing short positions, and was forced to stop losses due to unbearable holding pressure, he now watched the rapidly advancing GBP exchange rate, still pushing towards the 1.5200 mark, and was so furious he felt like spitting blood.
Of course, Xie Hongxing, who proposed the strategy of reducing positions and stopping losses, was also visibly stunned as he gazed at the GBP exchange rate trend at this moment.
"President Gu, Mr. Sato... As soon as Birmingham's preliminary vote count data came out, it basically confirmed tomorrow's referendum result."
As the GBP exchange rate trend reversed again, with long positions continuously increasing and short positions closing out more and more, Godfrey reconnected the instant messaging with Mitsui Sumitomo Investment Company and Tianhe Capital, the two affiliated institutions, and said with a smile to both of them,
"I've said it before, no matter how much the shorts in the market struggle, no matter how desperately they counterattack, they cannot change the existing market trend."
"Mr. Godfrey's judgment is truly impressive," Sato said with a smile, "To be honest... at that very moment, if the GBP exchange rate had fallen below the 1.5000 mark without resistance, I would have definitely chosen to close out and stop losses. Fortunately... none of that had time to happen, otherwise, I would be filled with regret right now."
Hearing Godfrey and Sato's words, Gu Chijiang felt utterly bitter at this moment.
His premature stop-loss due to inability to withstand the pressure resulted in him pointlessly losing millions of dollars in just over ten minutes.
"There shouldn't be any more surprises, right?" Gu Chijiang couldn't help but ask.
Godfrey replied: "As soon as Birmingham's results came out, the overall situation was basically decided. Most of the remaining regions and cities that haven't announced preliminary vote counts are sparsely populated marginal areas that won't play a decisive role in the referendum outcome.
As long as tomorrow's referendum results are without surprises, and the Bank of England's determination to stabilize the market exchange rate remains unshaken, then we can confidently go long."
"After tomorrow's referendum results are out, many people who rushed to sell off the pound today should buy it back, right?" Sato said, "Given that the Bank of England has already recovered approximately 20 billion USD in pounds, significantly reducing market liquidity, by conventional reasoning, with the referendum results within expectations, the GBP exchange rate will surely have a wave of retaliatory rebound."
"That's for sure," Godfrey said. "The major shorting institutions in the market have met their doom. Now... our correct strategy should be to go long, go long, and continue to go long unconditionally."
"Since the outcome is becoming increasingly certain..."
Sato watched as the GBP exchange rate's rebound grew stronger and stronger, already approaching the 1.5200 mark.
His previous fear not only completely dissipated but was replaced by a surge of greed.
He gritted his teeth and said,
"Then our institution will also put all our chips in."
With that, he immediately instructed Yamamoto Hisakazu behind him to aggressively pursue long orders, increasing the institution's long position weighting in the GBP exchange rate market.
Seeing that the main fund products managed by Godfrey and Sato were rapidly increasing their positions, Gu Chijiang inwardly cursed himself and couldn't help but quickly adjust his strategy, instructing Xie Hongxing to buy back the long positions that had been sold off at lower levels, again near the 1.5200 mark.
Furthermore, eager to recover the baseless losses caused by his previous incorrect operation, Gu Chijiang even ordered Xie Hongxing to buy the institution's GBP long positions to an excessive degree in one go.
Fortunately this time...
After he completed the relevant operations, the GBP exchange rate's trend did not disappoint him.
Under his continuous observation, at 9 PM Yanjing time, as the market trading hours began to gradually transition to the US trading session, the GBP exchange rate successfully broke above 1.5250, rebounding by more than 200 pips from its low in just one hour.
By then, under the extremely intense movements of the European trading session, a colossal number of global traders speculating on the GBP exchange rate intraday, both long and short, were all annihilated.
However, while the intraday speculative market was harvested back and forth, leading countless intraday speculative traders to complain endlessly, the true major long and short players in the market were still fiercely battling, with no clear winner yet.
(End of Chapter)