FX Breakout Monitor: September 7, 2020

Forex 4 minutes to read

John Hardy

Head of FX Strategy

Summary:  Even as equity markets gyrate wildly, most major FX pairs remain bottled up in their ranges, although things are stirring around the edges as sterling has weakened suddenly again on taking a hard line on Brexit and the US dollar is pressing hard enough to edge closer to breakout levels in at least two G10 pairings and in USDRUB.


Today’s Potential New Breakout Signals

Today we highlight five potential breakouts in progress that could maintain interest into today’s close of trade. Of these, USDRUB is actively in breakout if it closes at the current level, as is GBPAUD, which has poked to new lows intraday. EURSEK is also close to a breakout level and USDCHF likewise. It is worth noting that US markets are closed today, so volatility may edge lower toward the end of the European session today.

Table: Five potential breakouts today and methods for trading
Note that the stops for the example entry levels are a bit more than 1 ATR from the example entry level (trade size or stop level may need adjusting depending on entry level to reduce risk). These are not trade recommendations, rather examples for how to trade the breakouts. Exit date is simply nine days after trade entry, but 7-9 days is a rule of thumb for holding period and can be shorter still as stops should be partially trailed once a trade moves significantly into profit.

Source: Bloomberg and Saxo Group

Chart highlight: USDRUB
UDSRUB has pulled clear of the range in today’s trade and is at a new high for the local cycle on weakness in oil prices and concerns of sanctions on accusations from Germany surrounding the poisoning of opposition leader Navalny and possibly even on Russian activities in Belarus on the post-election unrest there. The only real resistance area left on the chart is toward the spike highs during the initial Covid-10 panic toward 80.00.

Source: Saxo Group

Chart highlight: GBPAUD
The sterling weakness, in part due to the UK taking a hard line and setting a mid-October deadline for reaching a deal while some legislators are looking to override a portion of the withdrawal agreement linked to the risk of a customs border between Northern Ireland and the Republic of Ireland. GBPUSD has reversed the recent rally badly and EURGBP is zooming back higher, but GBPAUD (and GBPCAD) have been the first pairs to show sterling fully breaking to new local lows beyond the 19-day closing level.

Table: Today’s Breakout Monitor
The breakout monitor below offers an overview of recent daily breakouts (a close above or below the prior 19-day highs or lows and 49-day highs and lows to give an indication of whether it there is also a medium term development). Note the new low close for the cycle on Friday in USDMXN, a USD/EM pair we highlighted on Thursday last week for a potential break – it is trading right on its 200-day moving average and in a very different place from USDRUB (discussed above).

Source: Saxo Group and Bloomberg
Disclaimer

Saxo Capital Markets (Australia) Pty Ltd 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.

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)

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) Pty Ltd 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 and Product Disclosure Statement 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. Trading in leveraged products such as CFDs and Margin FX products may result in your losses surpassing your initial deposits. 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.

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.