FX Breakout Monitor: September 9, 2020
Head of FX Strategy
Summary: Sterling weakness has persisted today and both silver and gold are eyeing a break lower if they close on a weak note today. Elsewhere, the US dollar continues to eye breakouts to the upside in places, today actually approaching a local breakout level against the Singapore dollar, the first USD-Asia pair to register on our radar in some time.
Today’s Potential New Breakout Signals
Today we highlight three potential breakouts today that could prove valid on today’s close of trading (breakout signals only registered on successful closes beyond the breakout level). Note that today we add silver to the list as has traded at a 19-day low close today.
Table: Seven potential breakouts today and methods for trading
We post the potential gold breakout lower again today as yesterday failed to see the price closing below the 19-day low close. We lower the entry level to 1906, justifying this with the fact that yesterday’s larger sell-off to below 1907 requires a bit more range in today’s open to close levels to show more determined downside momentum. Silver is in a similar situation as we discuss below.
Chart highlight: EURJPY
The technical situation in EURJPY is rather similar to EURUSD, which posted its lowest close in almost a month yesterday. Really, the pair needs to push down through the 124.50 area to suggest a larger breakdown risk – one that could be triggered in party by the euro absorbing some of the concern linked to the sudden return of hard Brexit risks this week. The reaction to tomorrow’s ECB meeting will be the deciding factor.
Spot silver is in largely the same situation as spot gold – here we suggest a close below 26.00 today, or soon, begins to show downside momentum risks picking up. We place the entry level for the example breakout trade setup at a level below the nominal 19-day low close of 26.44 because yesterday’s intraday price action took the pair below 26.00 for a brief few minutes and a closing level back toward that level suggests far more weakness than trading below the prior 19-day low close, which is still up in the area of the recent trading range.
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 GBPCHF is looking at a new 19-day low, adding to the picture of broadening sterling weakness.
Latest Market Insights
Quarterly Outlook Q3 2022: The Runaway Train
- Central banks' attempts to kill inflation is a paradigm shift, which could end in a deep recession.
Tangible assets and profitable growth are the winnersWith US equities officially in a bear market, the big question is where and when is the bottom in the current drawdown?
Understanding the lack of investment appetite among oil majorsThe everything rally seen in recent quarters has become more uneven, as its strength is driven by commodities in short supply.
The pressure is on as the wind leaves the sailsWith cryptocurrencies in sharp decline, are we entering a crypto winter or is the bear market a healthy clean-up of the crypto space?
Why the Fed can never catch up and what turns the US dollar lower?Many other central banks are set to eventually outpace the Fed in hiking rates, taking their real interest rates to levels higher than the Fed will achieve.
Bank of Japan: Swimming against the tideThe Japanese economy has gone from the age of deflation to rapidly rising prices in no time, leaving the Bank of Japan in a pickle.
Green transformation detour and bear market hibernationWith the impending risk of global econonomic derailment, we share the five things investors need to consider in this new half year.
Crisis redux for the eurozone?Whether there's going to be a recession in Europe or not, the path towards a stable economy will be agonizing.