Investing in 2012 will not be for the timid or faint of heart. If you hated 2011’s volatility, which we warned everyone publicly both here at Examiner.com an via my radio interviews, and Risks Shadow.com... well then be ready for another painful roller coaster ride in 2012. But there are several stunning large opportunities.
One of the best technically positioned for a large move is the Pound Sterling. Now what I am saying is that the Pound Sterling has been building a very large multi year foundation and the early stage of this move started May 2010 and then built a “key reversal” bottom at 1.4475 and then a staged a breakout to 1.5947 a move that almost no one even acknowledge publicly on Wall Street, London, Europe or Japan.
At the end of 2010 the Sterling built “Higher Tops & Bottoms” against the Euro bottom and US Dollar. Reaching a 2010 high of 1.6181. Then making a classic Bull Market A_B_C_ correction in late December. Again Wall Street and the so called expert “talking heads” of the Cable Business TV “entertainment” world paid not attention. Trading at the 1.5548 to the US Dollar in the first week of January of 2011.
The US Dollar weakness foreshadowed the strength of the Pound Sterling against the Euro Dollar, back in 2009. Then made a classic “Bull Market” breakout through the old highest bottom of 2010. The took off for the sky before the middle of January 2011....Pound Sterling launched skyward to 1.6708 in late April of 2011.
Now as we look at both the Euro Dollar and the US Dollar are “both” locked into paths down against the British Pound Sterling during 2012 and maybe longer! The Euro Dollar is in a “death spiral” against the Pound Sterling and currency markets are telling all of the “political” talking heads that all of the repeated lies of saving the Euro Dollar and the Euro zone economic meeting with fate. The Failure of the Euro Zone is not a question of “IF” but a matter of “when”.
The US Dollar and The Euro Dollar are both suffering from the ill effects of the same poisons of bad debt, bad real estate, bailouts, soaring public debt, soaring unemployment. And of Course the Stupidity of Political based “inflation” that leads to hyper inflation. After every inflation cycle the next economic crash is worse and faster than the previous economic cycle.
So what is really happening for the US Dollar is that during the last few months the Pound Sterling is finishing a what is massive consolidation pattern that started in April 2011 at 1.6708. Making final complex bottoming from recent highs of August at 1.6539 and bounced in the long term support band of 1.5325 to 1.5425. The Long term trend of the US Dollar against the Pound Sterling is now building the next break out to retest the 1.67 to 1.6750 resistance band. Once the Pound Sterling breaks out then we will see a very strong volatility rally that will keep making sharp bull market corrections and launching to new highs...the reality is that the power behind this process is all tied to the failure of Washington to turn the US Economy around and the total failure of Congress and White House on all levels. The Dollar while will move up against the Euro short term....the US Dollar will not do so against the Pound Sterling. This bull market pattern for the Sterling against the US Dollar see almost no resistance between 1.7750 and the magical 2 Pound Sterling exchange rate. Near term the last major wall is 1.71 to 1.75.
It is not that the Pound Sterling is strong it is that the US DOLLAR and Euro DOLLAR are dying from the death of a thousand cuts....All self inflicted! So this is rare time when you can be “LONG” Pound Sterling against both USD and Euro Dollar.
Almost any investment that is purchased in Pound Sterling will benefit from the currency move against the USD. However do not think that buying FT100 Stocks is suggested.
This is a currency Play...you can invest in many other types of hard assets. Any profits would be best held in Pound Sterling for the next 12-24 months.
