UK Financial Markets Rocks By Northern Rock

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By Benny Nardino | September 16, 2007

The recent events of the UK Banker - Northern Rocks have certainly rocked the forex market. Most especially the cable, GBP/USD and all other GBP crosses. There is no doubt that the media “fuel of fear” and panic have kept the fire burning on the Northern Rocks position. But where does it lead? How long will this continue? Who will gain or lose this battle of the press and the market?

The end shall tell. The past few days have seen a fair amount of speculation and accumulation in the forex market, especially on GBP/JPY cross. This cross has seen a significant bias downward since Thursday.

Cable on the othe hand, is at a critical point. From the chart (right), the mid-term trend look southbound but, then again, this could change in a matter of days. If the Fib-50 is broken @2.0020, we should be looking at 1.9800 region. Whilst it might look easy taking good amount of pips from the market if timed properly on the daily forex trading front, it could also become a swift way to ‘million dollars’ if caution were thrown into the wind. Therefore trade with your eyes open. If the TA don’t stand out wait on the side.

However the banking sector of the equity market, have been hit the hardest here in the UK in last few days. On Friday, NR shares plummented by 32%. With this problem still lingering on over the weekend, coupled with high volume of savers withdrawals, it will take NR awhile to recover from this. Although it’s highly unlikely they will ever admit this publicly.

From investment and trading perspective, the rule of thumb should prevail - never bet your farm. Trade with caution and you will have a reason to laugh at the close of the day. For those with money on NR accounts, you may have to get to unpleasant altitude before riding a comfortable one. At the moment, Northern Rock turbulence is still rocking the boat.

Have a great day.

Benny Nardino

Benny…
“A Mentor’s footprint is worth a thousand walk of trailblazing.
Seek the WISDOM of the fore-runners.”

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