Thanks Baba that makes sense. Ideal conditions for shorts to cover during the market sell-off allowing them to buy in to massive supply. It was the second leg down while shorts were still dropping (and after a short covering fueled rally) that had me scratching my head, but as you point out with a lack of buying pressure, the selling from profit takers (and others) could easily be absorbed by the shorts covering without any upward pressure on price. Nice and simple explanation- always like to take those rather than the complicated ones!
Thanks for those comparisons Gareth, and for putting SYR back on my radar! I know that was not your intention but it was good to me back around May last year so had a look again - it's just re-testing a meerkat pop out of a very tight Bollinger squeeze so is at a very interesting position .
I didn't check CBA but you are quite right, GXY has fared very well in comparison to SYR. Both had shorts peak on 11/3 at over 20%, and both had already started selling off early to mid February. However SYR was smashed a lot harder and at much higher relative volumes than GXY, dropping about 75% compared to GXY's 44% over the same period. So I guess little wonder that SYR shorts have evaporated down to 5.55% - they have cashed in during the sell-off and booked a 2021 trip to the Bahamas. What will be interesting is whether all that pain has set it up for some future gain.
Not sure where that leaves GXY- the most highly traded area since the last bottom is a narrow band between 0.77 and 0.785, and last close was right on 0.785. Looking short term, a break and close below 0.77 would obviously not be positive, but a bounce off around 0.77 to close at 0.785 or above would be nice.
Apologies for the rambling- I'll blame the combination of the Covid lock-down and some iso-beers....
GXY Price at posting:
78.5¢ Sentiment: None Disclosure: Not Held
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