FX Breakout Monitor: Breakouts all over – and this may only be the start FX Breakout Monitor: Breakouts all over – and this may only be the start FX Breakout Monitor: Breakouts all over – and this may only be the start

FX Breakout Monitor: Breakouts all over – and this may only be the start

Forex 5 minutes to read
John Hardy

Head of FX Strategy

Summary:  We have entered a real breakout swarm here amidst signs of trading range expansion and some currency pairs entering or threatening territory not seen in years. The USD looks to be mounting a major campaign higher if EURUSD can join the strong USD party.


For a PDF copy of this edition, click here.

 There hasn’t exactly been a shortage of breakouts in recent market history, as these have been rather easy to achieve because trading ranges are so constricted lately. But most of these proved of very poor quality. But fresh breakouts and range expansions are now gaining significant momentum, led by a rather chunky move in the CHF to the downside, a multi-year breakout in USDCHF, and a signs of range expansion, with very key levels under strain in EURUSD and GBPUSD as we discuss below. 

Breakout signal tracker

We add a long EURSEK, a long USDSEK and a short NZDUSD position on our tracker, even if we are a bit late on jumping aboard the last of these, trading the stronger US dollar against the small G10 currencies  and the very weak SEK. Trade may also consider long USDTHB and long USDSGD as additional or alternative ideas.
Source: Saxo Bank
Today’s FX Breakout monitor

Page 1: the swarm of USD breakouts is growing, today seeing USDSEK and on Page 2, some EM FX breaking down against the big USD – adding EURUSD and USDJPY to the mix (both very close here – 0.3 ATR as of the snapshot below) in coming session could add further energy to this USD rally.
Source: Saxo Bank
Page 2: Here the biggest standout, besides fresh breaks in USD / EM can be found in the SEK pairs, with EURSEK and USDSEK set to register breakouts on today’s close if the move is sustained at current levels or higher into today’s close. 
Source: Saxo Bank
Chart: NZDUSD

A bit late to the party here, but NZDUSD still looks tradeable for a test of the 0.6500 lows in coming sessions after the major range and 200-day SMA break of the last few sessions, driven by concerns that further Chinese stimulus will be limited.
Source: Saxo Bank
Chart: EURSEK

Weak April flash EU PMIs last Thursday no help for the  hapless SEK, as EURSEK never broke down and could now risk a squeeze higher if global risk sentiment and growth concerns rise back to the surface. The move here could setup a test of the cycle  highs, which would erase the triple top argument and possibly even set up new post-GFC highs for the pair.
Source: Saxo Bank
Chart: USDSEK

We add USDSEK to our USD longs as the chart setup and today’s range expansion look compelling and the move could be compounded both by a EURSEK breakout (see above) and if EURUSD follow through below 1.1200 in coming sessions.
 
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

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 Inspiration Disclaimer and (v) Notices applying to Trade Inspiration, 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-sg/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 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 Markets or its affiliates.

Saxo Markets
88 Market Street
CapitaSpring #31-01
Singapore 048948

Contact Saxo

Select region

Singapore
Singapore

Saxo Capital Markets Pte Ltd ('Saxo Markets') is a company authorised and regulated by the Monetary Authority of Singapore (MAS) [Co. Reg. No.: 200601141M ] and is a wholly owned subsidiary of Saxo Bank A/S, headquartered in Denmark. Please refer to our General Business Terms & Risk Warning 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. Trading in leveraged products such as Margin FX products may result in your losses exceeding your initial deposits. Saxo Markets does not provide financial advice, any information available on this website is ‘general’ in nature and for informational purposes only. Saxo Markets does not take into account an individual’s needs, objectives or financial situation.

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

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 are not intended for residents of the United States, Malaysia and Japan. Please click here to view our full disclaimer.

This advertisement has not been reviewed by the Monetary Authority of Singapore.

Apple and the Apple logo are trademarks of Apple Inc, registered in the US and other countries and regions. App Store is a service mark of Apple Inc. Google Play and the Google Play logo are trademarks of Google LLC.