FX Breakout Monitor: Risk-off rally boosts CHF, JPY

Today’s FX Breakout monitor

Page 1: The GBP breakdown is the most notable development over the last couple of sessions, with GBPUSD also looking at a new 49-day low today. The heavy JPY crosses also stick out here, and so does the EURCHF breakdown – EURUSD coming under pressure makes USDCHF look a bit less compelling, as does the chart setup. Note USDCAD on the cusp, yet again, of a breakout attempt to the upside.

Page 2: mostly an extension of existing trends here, though USD/G10 smalls pressure is also in focus with USDNOK and USDSEK eyeing new cycle highs if the USD follows through higher. The outlook for gold is also critical after the recent rally move we pointed out earlier this week.

Chart: GBPUSD

Cable breakdown looking more impressive as the pair has also taken out the 49-day lows and EURGBP is also seeing a break higher. The next level of note to the downside doesn’t really come in until the 1.2500 area.

Chart: USDCAD

Volatility is extremely compressed in USDCAD, with the most compressed daily trading range since 2014, but we still look for the potential of a break higher here above 1.3500 on a daily close to unleash the potential higher. 

REFERENCE: FX Breakout Monitor overview explanations

The following is a left-to-right, column by column explanation of the FX Breakout Monitor tables.

Trend: a measure of whether the currency pair is trending up, down or sideways based on an algorithm that looks for persistent directional price action. A currency can register a breakout before it looks like it is trending if markets are choppy.

ATR: Average True Range or the average daily trading range. Our calculation of this indicator uses a 50-day exponential moving average to smooth development. The shading indicates whether, relative to the prior 1,000 trading days, the current ATR is exceptionally high (deep orange), somewhat elevated (lighter orange), normal (no shading), quiet (light blue) or exceptionally quiet (deeper blue).

High Closes / Low Closes: These columns show the highest and lowest prior 19- and 49-day daily closing levels.  

Breakouts: The right-most several columns columns indicate whether a breakout to the upside or downside has unfolded today (coloured “X”) or on any of the previous six trading days. This graphic indication offers an easy way to see whether the breakout is the first in a series or is a continuation from a prior break. For the “Today” columns for 19-day and 49-day breakouts, if there is no break, the distance from the current “Quote” to the break level is shown in ATR, and coloured yellow if getting close to registering a breakout. 

NOTE: although the Today column may show a breakout in action, the daily close is the key level that is the final arbiter on whether the breakout is registered for subsequent days.