Forex 22nd August 2008

On Thursday most currencies broke out of their 3-day highs and have continued higher.

I said in last Week's reports, that later this week or next week there is an expectation that spreads are moving back towards their September 50% levels, and then the next 2-month down trend begins.

Thursday's 3-day breakout is the start of the rotation upwards.

At this stage on Friday I have a view that most currencies are heading back towards the Weekly 50% levels (resistance).

The best pattern on Friday is to see currencies find support above the Thursday high breakout and continue higher into a higher Friday close:- brown filter support.

If that happens then next week we will look for a 2-day down move before the trend continues higher next week and back towards the September 50% levels.

But if Thursday keeps rising and Friday moves into the Weekly 50% level early (GMT), then there could be a reversal back down to re-test the breakouts on Thursday....

Therefore I would like to be trading longs on Friday into the Weekly 50% levels

Daily Reports below..