FX Breakout Monitor: Dollar dithers while AUDNZD stirs FX Breakout Monitor: Dollar dithers while AUDNZD stirs FX Breakout Monitor: Dollar dithers while AUDNZD stirs

FX Breakout Monitor: Dollar dithers while AUDNZD stirs

Forex 4 minutes to read
John Hardy

Head of FX Strategy

Summary:  The dollar remains reluctant to make a statement with AUDNZD the most interesting new technical development of the day.


For a PDF copy of this edition, click here.

The US dollar has weakened further after Friday’s watershed with Federal Reserve chair Powell and trades at new lows versus a number of emerging market currencies while most G10 pairs have more wood to chop before registering a USD breakdown. 

Today’s market saw little volatility, with generally tight trading ranges. The most interesting fresh breakout development over the last couple of days has been AUDNZD’s attempt to break above the lower range. EURUSD closed nominally at a new high yesterday by a few pips, but not clear of the range as the market seems reluctant to follow up on the impulse of USD selling in the wake of Powell’s comments on Friday.

Today’s FX Breakout monitor

Page 1: USDCAD traded below the lowest 19-day close (a reminder that 19 days is less relevant than a slightly longer time period given the holiday period of trading), but this development comes the day before tomorrow’s Bank of Canada and lacks a clear pivot for now – could develop nonetheless but would like confirming price action after the BoC meeting tomorrow and signs of a weaker USD elsewhere.
FX Breakouts
Source: Saxo Bank
Page 2: USDTRY was bid to a new local high on political concerns while USDMXN continues to head lower. EURNOK has fallen sharply but is just now getting to new 19-day low territory and the important 9.75-80 zone.
FX Breakouts
Source: Saxo Bank
Chart: AUDNZD

The move in AUDNZD is easily the most interesting new technical development as the pair closed clear of the quite well-defined local range over the last couple of days and in the context of having rejected the major prior 2018 low just below 1.0500; the pair could now eye higher levels after rebounding from AUD flash crash lows.

The next key area higher is perhaps into the 200-day moving average, just ahead of the big 1.0800-50 area.We noted the key EURUSD level not far away in EURUSD (1.1467, the highest 19-day and 49-day closing level) as significant for the wider USD outlook. In USDNOK, a technical breakdown back through old highs around 8.60 is already unfolding as the USD is weakening on the Fed’s change of rhetorical stance and NOK is rallying on the resurgence in oil prices. 
AUDNZD
Source: Saxo Bank
FX Breakout Monitor overview explanations

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

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.

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

UP and DOWN Break Levels
: These columns show how close, in ATR terms the current price is from breaking the highest and lowest prior 19- and 49-day daily closing levels, with the “breakout level” indicating the actual level of that highest or lowest close. If a breakout is getting close in ATR terms, it is highlighted in yellow or bright yellow (very close). If the current price is trading above or below the breakout levels, in other words, has just broken out, an “X” is shown to indicate this rather than an actual ATR reading.

NEW Breakouts
: These are indications of whether, at the time of the snapshot of the market, the currency pair is trading above or below the breakout level. NOTE: it is key that the intention here is to highlight NEW or initiail breakouts, as a pair that has been trending consistently and has set multiple (more than two) new highs/lows will not be highlighted. This is done to avoid too much noise on the chart and focus on new information. 

Number of breakouts for prior 8 days
: This is merely a counter to indicate the number of days in which the pair has posted a new daily 19-day or 49-day high or low close. It will flag currency pairs that have been trending strongly recently but aren’t actively breaking out at the time of the snapshot of the model and/or aren’t highlighted in the NEW Breakouts part of the table

Recent New 19-day Signals
: this gives the reader a chance to see if any recent 19-day breakout signals were registered over the prior three days for perspective on recent developments. The prior day’s signals particularly interesting if waiting for daily closes before deciding whether to trade a breakout on the following day. If there have been more than three prior signals over the past eight days, no signal is shown in order to reduce the “noise” on the overview (though all signals are tallied in the “number of breakouts…” column to the left). 

Disclaimer

The Saxo Bank Group entities each provide execution-only service and access to Analysis permitting a person to view and/or use content available on or via the website. This content is not intended to and does not change or expand on the execution-only service. Such access and use are at all times subject to (i) The Terms of Use; (ii) Full Disclaimer; (iii) The Risk Warning; (iv) the Rules of Engagement and (v) Notices applying to Saxo News & Research and/or its content in addition (where relevant) to the terms governing the use of hyperlinks on the website of a member of the Saxo Bank Group by which access to Saxo News & Research is gained. Such content is therefore provided as no more than information. In particular no advice is intended to be provided or to be relied on as provided nor endorsed by any Saxo Bank Group entity; nor is it to be construed as solicitation or an incentive provided to subscribe for or sell or purchase any financial instrument. All trading or investments you make must be pursuant to your own unprompted and informed self-directed decision. As such no Saxo Bank Group entity will have or be liable for any losses that you may sustain as a result of any investment decision made in reliance on information which is available on Saxo News & Research or as a result of the use of the Saxo News & Research. Orders given and trades effected are deemed intended to be given or effected for the account of the customer with the Saxo Bank Group entity operating in the jurisdiction in which the customer resides and/or with whom the customer opened and maintains his/her trading account. Saxo News & Research 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. To the extent that any content is construed as investment research, you must note and accept that the 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 under relevant laws.

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

Saxo Markets
40 Bank Street, 26th floor
E14 5DA
London
United Kingdom

Contact Saxo

Select region

United Kingdom
United Kingdom

Trade Responsibly
All trading carries risk. To help you understand the risks involved we have put together a series of Key Information Documents (KIDs) highlighting the risks and rewards related to each product. Read more
Additional Key Information Documents are available in our trading platform.

Saxo Markets is a registered Trading Name of Saxo Capital Markets UK Ltd (‘SCML’). SCML is authorised and regulated by the Financial Conduct Authority, Firm Reference Number 551422. Registered address: 26th Floor, 40 Bank Street, Canary Wharf, London E14 5DA. Company number 7413871. Registered in England & Wales.

This website, including the information and materials contained in it, are not directed at, or intended for distribution to or use by, any person or entity who is a citizen or resident of or located in the United States, Belgium or any other jurisdiction where such distribution, publication, availability or use would be contrary to applicable law or regulation.

It is important that you understand that with investments, your capital is at risk. Past performance is not a guide to future performance. It is your responsibility to ensure that you make an informed decision about whether or not to invest with us. If you are still unsure if investing is right for you, please seek independent advice. Saxo Markets assumes no liability for any loss sustained from trading in accordance with a recommendation.

Apple, iPad and iPhone are trademarks of Apple Inc., registered in the U.S. and other countries. App Store is a service mark of Apple Inc. Android is a trademark of Google Inc.

©   since 1992