Quarterly Outlook
Q3 Investor Outlook: Beyond American shores – why diversification is your strongest ally
Jacob Falkencrone
Global Head of Investment Strategy
FX Breakout Monitor: Curious combinations
John J. Hardy
Global Head of Macro Strategy
Summary: We have an odd menu of breakout candidates today, with no distinguishable theme as traders chase individual stories. Sterling took a back seat to developments elsewhere, while the Swedish krona pushed higher on positive data.
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A very odd menu of breakout threats on our radar today, as USDCHF suffered very ugly losses intraday and challenged 19-day lows before bouncing while USDJPY remains fairly buoyant and is looking at an upside break as of this writing and as we discuss below.
Elsewhere, USDTHB is challenging interesting levels to the upside, perhaps showing signs of a double bottom setup. The supermajors are a hopeless mess of range trading, with EURUSD locally higher but fully embedded in the range and USDJPY changing direction daily.
SEK got a strong, data-inspired boost today, but as the krona was recently challenging new lows, it will take considerable further strength to shift the outlook to upside breaks.
Breakout signal tracker
We add a EURGBP short signal today in the hopes that the pair can achieve further downside after breaking the well-established lows this week. Headline risks abound, but the technical situation is rather straightforward. We place the stop 1.1 ATR above entry and will hold up to eight days depending on developments.
Today’s FX Breakout monitor
Page 1: EURJPY has yet again poked to a new high and USDJPY is looking at doing the same after a strong US Q4 GDP print. Note the EURAUD threat of a new break higher we discuss below.
A very odd menu of breakout threats on our radar today, as USDCHF suffered very ugly losses intraday and challenged 19-day lows before bouncing while USDJPY remains fairly buoyant and is looking at an upside break as of this writing and as we discuss below.
Elsewhere, USDTHB is challenging interesting levels to the upside, perhaps showing signs of a double bottom setup. The supermajors are a hopeless mess of range trading, with EURUSD locally higher but fully embedded in the range and USDJPY changing direction daily.
SEK got a strong, data-inspired boost today, but as the krona was recently challenging new lows, it will take considerable further strength to shift the outlook to upside breaks.
Breakout signal tracker
We add a EURGBP short signal today in the hopes that the pair can achieve further downside after breaking the well-established lows this week. Headline risks abound, but the technical situation is rather straightforward. We place the stop 1.1 ATR above entry and will hold up to eight days depending on developments.
Today’s FX Breakout monitor
Page 1: EURJPY has yet again poked to a new high and USDJPY is looking at doing the same after a strong US Q4 GDP print. Note the EURAUD threat of a new break higher we discuss below.
Page 2: USDTRY and USDTHB are the emerging market pairs closest to or at breakout levels as of this writing.
Chart: EURGBP
We add a EURGBP short signal to our list on the recent break and hold of the range lows – we are looking for decent progress lower over the next eight days ahead of the key March 12 vote on PM May’s Brexit deal.
We add a EURGBP short signal to our list on the recent break and hold of the range lows – we are looking for decent progress lower over the next eight days ahead of the key March 12 vote on PM May’s Brexit deal.
Chart: USDJPY
USDJPY threatening a fresh high close for the cycle today after daily direction changes over the last few days. The important 200-day moving average lies just a bit higher.
USDJPY threatening a fresh high close for the cycle today after daily direction changes over the last few days. The important 200-day moving average lies just a bit higher.
Chart: EURAUD
We note the EURAUD situation with interest, given the very clear range demarcation around 1.6000 if the pair manages a close above that level in the days ahead for a possible run at the 1.6300+ top. Stay tuned.
We note the EURAUD situation with interest, given the very clear range demarcation around 1.6000 if the pair manages a close above that level in the days ahead for a possible run at the 1.6300+ top. Stay tuned.
Chart: USDTHB
USDTHB looking higher here and close to a local pivot break that would take it to a new high close for the last 19 days and possibly set in motion a short squeeze for higher levels. Adding cyclical interest, the old major low from early 2018 was around 31.08, a bit higher than the recent cycle low.
USDTHB looking higher here and close to a local pivot break that would take it to a new high close for the last 19 days and possibly set in motion a short squeeze for higher levels. Adding cyclical interest, the old major low from early 2018 was around 31.08, a bit higher than the recent cycle low.
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.
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.
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