Most Asian Currencies Breaking Support Against USD

08/26/2008 12:00 am EST

Focus: FOREX

Wayne McDonell

Chief Currency Coach, FX Bootcamp, LLC

After some trend continuation in the USD and oil on Friday, Asia made a break of support on most USD pairs, leaving London wondering where to go. Given that a holiday in England was already going to reduce liquidity, and without nearby support or resistance, some time was needed to lay some framework for a trade plan. Watching the majors closely, we were able to find these clues.

In the below video, I focus on just one of these plans involving the GBP/USD. After a series of higher lows, the cable showed a break of the 15 and 21 EMA. Once this occurred, we did a Fibonacci study and simply awaited some level of confirmation on a 1m chart in the 38.2-61.8 range. Sure enough, within 30 minutes, this entry presented itself in the mid 1.9420's. As for profit targeting, it was quite simple. A retest of previous support, now resistance, at 1.8500-8510, which also happened to be the hourly 21, was our first real stop. So ultimately we were risking maybe 15 pips for a 75 pippish goal from our fib entry, certainly a quality risk vs. reward setup.

Although it seemed to take literally forever to play out, there was never a reason to get out. Slowly, we “Rode the 5ema” and made our way to the 1.8520 area before abruptly returning to 1.9485 or so (another fib). Boring night for sure, but a decent 65-95 pip move, even from the fib area here, made the wait well worth it.

By Wayne McDonell of