FX Breakout Monitor: JPY gathering strength, NZD pummeled FX Breakout Monitor: JPY gathering strength, NZD pummeled FX Breakout Monitor: JPY gathering strength, NZD pummeled

FX Breakout Monitor: JPY gathering strength, NZD pummeled

Forex 5 minutes to read
John Hardy

Head of FX Strategy

Summary:  Today we are looking at JPY strength on the global bond yield decline, as well as NZD weakness.


For a PDF copy of this edition, click here.

The JPY reversal to the strong side we noted yesterday (and which prompted our abandoning of the USDJPY long trade ahead of the stop) has deepened, with EURJPY now suddenly within reach of a downside breakout and AUDJPY in a similar state.

We also have EURUSD on our radar once again as we eye the 1.1300 area lows for a potential break lower.

NZDUSD joins the downside break watchlist as well, while USDSEK is poking at very long term breakout levels to the upside, having leapt higher in recent days on persistent SEK weakness.

Breakout signal tracker

Nothing to add today, with the next potential trades on our radar possibly being EURJPY and EURUSD depending on how the situation develops in the coming days.
Breakout signatures
Source: Saxo Bank
Today’s FX Breakout monitor

Page 1: EURUSD not far from the downside breakout again, but as we have pointed out previously, seeing is believing as the range has persisted for so long and prior breakouts in both directions have failed to follow through significantly.

We also look at EURJPY downside potential on that 123.95 level. We highlighted yesterday’s AUDCAD breakdown and are looking for follow-through lower as we track that signal.
FX Breakouts
Source: Saxo Bank
Page 2: SEK continues to trend and we look at USDSEK below; we are already breaking up locally in recent days, but a very big longer-term level is in view here at 9.5. USDMXN is the first USD/EM to eye an upside break, so stay tuned. 
Source: Saxo Bank
Chart: USDSEK weekly

USDSEK broke free of the local range in recent days, but we zoom out to the weekly chart here to have a look at the potential for a larger scale break of the highs stretching all the way back to late 2016, which could open for a test higher still if USD strength broadens in a context of risk off – particularly if EURUSD 1.1300 falls. Note that the current price is already almost a percentage point above the highest weekly close of the last several months.
USDSEK
Source: Saxo Bank
Chart: EURJPY

Interesting levels coming up soon for EURJPY, which is already threatening the rising channel boundary today, but that 19-day low close at 123.95 was the lowest save for the flash-crash lows seen early last month.
EURJPY
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.

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.

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.