FX Breakout Monitor September 12 2019 FX Breakout Monitor September 12 2019 FX Breakout Monitor September 12 2019

FX Breakout Monitor September 12 2019

Forex 5 minutes to read
John Hardy

Head of FX Strategy

Summary:  The FX Breakout Monitor shows risk-on currencies trying to make a break for it against the euro single currency in recent sessions ahead of today’s ECB meeting, a pivotal event risk. Will Draghi and company encourage this development or disappoint expectations for a strong new easing programme?


The FX Breakout Monitor is back, and it is expanded with "autosignals" that show examples of how to trade new breakouts, defined as new 19-day high or low closes not preceded by a breakout in the same direction in the prior week.

Chart highlight of potential new signal: NZDUSD
NZDUSD is eyeing a new 19-day high close today if it closes above the 0.6426 level. Note that the signal isn’t “valid” unless the pair is above that level at the close of trading. Also note that the trend reading is still 0, meaning that the trend measurement algorithm has not yet switched positive. On the chart below, it is easy to spot why NZDUSD has not yet registered an uptrend, because this latest move comes in the wake of a very powerful down-move, requiring a bit more time before an uptrend can be established. The prior major low of 0.6500 is a key hurdle as well – but stay tuned as NZDUSD has clearly risen to levels where the bear trend becomes neutralized if the rally persists from here.

Source: Saxo Bank

REFERENCE: FX Breakout Monitor overview explanations

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

Quote: the latest price at the time the monitor was generated.

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 for each pair. 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: These columns indicate whether a breakout to the upside or downside may be unfolding today (if the price action at the time of the scan is below or above the 19-day or 49-day high/low, a coloured “X” appears in the Today column) or has occurred in recent days. For the 49-day breakouts, we only show today, yesterday and whether a breakout has occurred in the prior week (indicated “PW”) This graphic indication offers an easy way to see whether a breakout is new or one of a series of a continuation signals from a prior breakout. 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 shaded yellow if getting close to registering a breakout. NOTE: although the Today column may show a breakout in action – an “X”, the breakout signal is only valid if it survives the daily closing level indicated as the breakout level (i.e., intraday breakouts will not be registered for the prior days).

Page 3 and 4: This is a list of most recent "auto-signal" for all instruments covered in FX Breakout Monitor. A breakout signal (19-day only) qualifies if it is the first signal in five trading days. The entry date is the day on which the pair registered a breakout on the close-of-day basis. The entry price is assumed to be the price on close for that day. The assumed stop is 1.05 ATR from the entry price and the  exit day is nine trading days later, assuming a stop-out has not occurred in the interim (date of stop-out not shown, but is shown in the P&L calculation). Note that the P&L calculation is a multiple of the distance to the stop, so a gain of 1.05 ATR (the same as the distance to the stop from the entry price) shows up as a P&L of 1, just as a stop-out registers as a -1. This normalizes P&L to the amount risked, regardless of the underlying instrument's volatility. Important: carry not included in P&L calculations and can be substantial for some EM currencies in particular. Note that the maximum DrawUp is included for perspective and is shown in as multiples of the distance to the stop, just as for the P&L calculations.

Disclaimer

Saxo Capital Markets (Australia) Limited prepares and distributes information/research produced within the Saxo Bank Group for informational purposes only. In addition to the disclaimer below, if any general advice is provided, such advice does not take into account your individual objectives, financial situation or needs. You should consider the appropriateness of trading any financial instrument as trading can result in losses that exceed your initial investment. Please refer to our Analysis Disclaimer, and our Financial Services Guide and Product Disclosure Statement. All legal documentation and disclaimers can be found at https://www.home.saxo/en-au/legal/.

The Saxo Bank Group entities each provide execution-only service. Access and use of Saxo News & Research and any Saxo Bank Group website are subject to (i) the Terms of Use; (ii) the full Disclaimer; and (iii) the Risk Warning in addition (where relevant) to the terms governing the use of the website of a member of the Saxo Bank Group.

Saxo News & Research is provided for informational purposes, does not contain (and should not be construed as containing) financial, investment, tax or trading advice or advice of any sort offered, recommended or endorsed by Saxo Bank Group and should not be construed as a record of our trading prices, or as an offer, incentive or solicitation for the subscription, sale or purchase in any financial instrument. No representation or warranty is given as to the accuracy or completeness of this information. All trading or investments you make must be pursuant to your own unprompted and informed self-directed decision. No Saxo Bank Group entity shall be liable for any losses that you may sustain as a result of any investment decision made in reliance on information on Saxo News & Research.

To the extent that any content is construed as investment research, such content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, would be considered as a marketing communication.

None of the information contained here constitutes an offer to purchase or sell a financial instrument, or to make any investments.Saxo Capital Markets does not take into account your personal investment objectives or financial situation and makes no representation and assumes no liability as to the accuracy or completeness of the information nor for any loss arising from any investment made in reliance of this presentation. Any opinions made are subject to change and may be personal to the author. These may not necessarily reflect the opinion of Saxo Capital Markets or its affiliates.

Please read our disclaimers:
- Full Disclaimer (https://www.home.saxo/en-au/legal/disclaimer/saxo-disclaimer)
- Analysis Disclaimer (https://www.home.saxo/en-au/legal/analysis-disclaimer/saxo-analysis-disclaimer)
- Notification on Non-Independent Investment Research (https://www.home.saxo/legal/niird/notification)

Saxo Capital Markets (Australia) Limited
Suite 1, Level 14, 9 Castlereagh St
Sydney NSW 2000
Australia

Contact Saxo

Select region

Australia
Australia

The Saxo trading platform has received numerous awards and recognition. For details of these awards and information on awards visit www.home.saxo/en-au/about-us/awards

Saxo Capital Markets (Australia) Limited ABN 32 110 128 286 AFSL 280372 (‘Saxo’ or ‘Saxo Capital Markets’) is a wholly owned subsidiary of Saxo Bank A/S, headquartered in Denmark. Please refer to our General Business Terms, Financial Services Guide, Product Disclosure Statement and Target Market Determination to consider whether acquiring or continuing to hold financial products is suitable for you, prior to opening an account and investing in a financial product.

Trading in financial instruments carries various risks, and is not suitable for all investors. Please seek expert advice, and always ensure that you fully understand these risks before trading. Saxo Capital Markets does not provide ‘personal’ financial product advice, any information available on this website is ‘general’ in nature and for informational purposes only. Saxo Capital Markets does not take into account an individual’s needs, objectives or financial situation. The Target Market Determination should assist you in determining whether any of the products or services we offer are likely to be consistent with your objectives, financial situation and needs.

Apple, iPad and iPhone are trademarks of Apple Inc., registered in the US and other countries. AppStore is a service mark of Apple Inc.

The information or the products and services referred to on this website may be accessed worldwide, however is only intended for distribution to and use by recipients located in countries where such use does not constitute a violation of applicable legislation or regulations. Products and Services offered on this website is not intended for residents of the United States and Japan.

Please click here to view our full disclaimer.