FX Breakout Monitor: Recent JPY breaks extend, USD bounces FX Breakout Monitor: Recent JPY breaks extend, USD bounces FX Breakout Monitor: Recent JPY breaks extend, USD bounces

FX Breakout Monitor: Recent JPY breaks extend, USD bounces

Forex 8 minutes to read
John Hardy

Head of FX Strategy

Summary:  The recent JPY breakouts are extending aggressively in nearly every G10 JPY cross. Meanwhile, the USD has avoided tumbling over the edge in broad terms despite the USDJPY meltdown and is eyeing fresh highs versus the commodity dollars as 2019 gets underway.

For a PDF copy of this edition, click here.

The beginning of a new calendar year is the right time for paying attention to fresh range breaks. As the year gets under way, traders put fresh ideas and capital to work as liquidity returns to markets after the tricky holiday period and end-of-quarter, end-of-year rebalancing flows fade in the rear view mirror.

The recent JPY breakout higher, however, unfolded already in the wake of the December 20 Federal Open Market Committee meeting and is already getting a bit long in the tooth in places, so we wonder how much further this can extend – especially in USDJPY terms as the USD has perked up on the year’s first trading day. The JPY has a tendency to extend aggressively but then reverse equally sharply – much like the typical steep equity sell-off and backfilling that occurs in bear markets like the current one.

Today’s FX Breakout monitor

Page 1: Both USDJPY and EURJPY are at new 19-day and 49-day lows as of today’s snapshot but don’t show up in the “new breakouts” alert column as these are extensions of prior fresh breakouts. EURCHF is cropping up on the new breakout radar again but has a terrible record of follow through on technical breakouts and hasn’t fully cleared the recent range extremes. Elsewhere, AUDCAD is worth noting for downside developments as we highlight below, while the EURAUD “breakout” higher in overbought conditions and near a huge range resistance – patience there. We also have a look at AUDUSD today in a chart below – as it is breaking lower again not only on local scale, but in cycle terms as well.
Source: Saxo Bank
Page 2: AUDJPY and GBPJPY are at new lows for the cycle, but as for EURJPY, these are already breaks that unfolded before Christmas and the latest extremes are extensions of existing moves. Note the USDTHB poking at new lows again – this is likely a function of China insisting on maintaining a firm CNY, likely as a good faith measure during the trade negotiations period with the US – thus we don’t see extension lower as likely if USD firm elsewhere. Gold and silver are at new highs for the cycle in recent days, but not highlighted as fresh breakouts. Finally, USDTRY is looking at a new 19-day high, but a move above 5.50 would look more technically significant in the days ahead.
Source: Saxo Bank


The technically promising break lower in the wake of the December FOMC meeting has extended aggressively since. But with the USD showing signs of firming elsewhere and as we are well into the second wave of price action lower, the near term risk/reward look may prove limited.

Source: Saxo Bank

Given a USD resurgence as the New Year gets under way, other JPY crosses may have more to offer in JPY upside terms. Note the EURJPY posting fresh lows here since the summer of 2017, a major break.
Source: Saxo Bank

AUDUSD is clearing major levels intraday today, possibly setting up at least a go at the major lows for the cycle back in early 2016 that come in below 0.6850.
Source: Saxo Bank

The break lower here – assuming we hold below the range lows into the close today – looks technically compelling for an extension lower – perhaps towards a 61.8% retracement of the prior rally, which comes in around 0.9365. 
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 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. 

Quarterly Outlook 2024 Q3

Sandcastle economics

01 / 07

  • Macro: Sandcastle economics

    Invest wisely in Q3 2024: Discover SaxoStrats' insights on navigating a stable yet fragile global economy.

    Read article
  • Bonds: What to do until inflation stabilises

    Discover strategies for managing bonds as US and European yields remain rangebound due to uncertain inflation and evolving monetary policies.

    Read article
  • Equities: Are we blowing bubbles again

    Explore key trends and opportunities in European equities and electrification theme as market dynamics echo 2021's rally.

    Read article
  • FX: Risk-on currencies to surge against havens

    Explore the outlook for USD, AUD, NZD, and EM carry trades as risk-on currencies are set to outperform in Q3 2024.

    Read article
  • Commodities: Energy and grains in focus as metals pause

    Energy and grains to shine as metals pause. Discover key trends and market drivers for commodities in Q3 2024.

    Read article
  • The rise of populism: Far-right parties will influence the future

    The disheartening cycle of unresolved geopolitical conflicts, the rise of polarizing political parties, and the stagnation of productivity.

    Read article
  • Investing in China: Navigating Q1 amid economic challenges

    Understand China's political landscape in Q4 2023 and the impact on counter-cyclical initiatives, with a focus on the pivotal Q1 2024.

    Read article

The Saxo 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 is not intended to and does not change or expand on this. 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 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 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 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 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 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-hk/legal/disclaimer/saxo-disclaimer)

None of the information contained here constitutes an offer to purchase or sell a financial instrument, or to make any investments. Saxo 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 or its affiliates.

Saxo Capital Markets HK Limited
19th Floor
Shanghai Commercial Bank Tower
12 Queen’s Road Central
Hong Kong

Contact Saxo

Select region

Hong Kong S.A.R
Hong Kong S.A.R

Saxo Capital Markets HK Limited (“Saxo”) is a company authorised and regulated by the Securities and Futures Commission of Hong Kong. Saxo holds a Type 1 Regulated Activity (Dealing in Securities); Type 2 Regulated Activity (Dealing in Futures Contract); Type 3 Regulated Activity (Leveraged Foreign Exchange Trading); Type 4 Regulated Activity (Advising on Securities) and Type 9 Regulated Activity (Asset Management) licenses (CE No. AVD061). Registered address: 19th Floor, Shanghai Commercial Bank Tower, 12 Queen’s Road Central, Hong Kong.

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 may result in your losses exceeding your initial deposits. Saxo does not provide financial advice, any information available on this website is ‘general’ in nature and for informational purposes only. Saxo does not take into account an individual’s needs, objectives or financial situation. Please click here to view the relevant risk disclosure statements.

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

The information or the products and services referred to on this site 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 are not directed at, or intended for distribution to or use by, any person or entity residing in the United States and Japan. Please click here to view our full disclaimer.

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