FX Breakout Monitor: USD and safe-haven FX riding high

Today’s FX Breakout monitor

Page 1: EURUSD is having a go at a new downside breakout for the cycle – can the third  time prove the charm after the prior two attempts were quickly reversed? We’ll see – the Monday session could prove the key one as we await the results of the EU Parliamentary elections Sunday evening. EURJPY is also poking to new lows for the cycle and could prove compelling for a trend continuation trade if this weak risk sentiment worsens further. Elsewhere, also note USDCAD once again trying to break higher.

Page 2: mostly about extensions of recent trends here, but note the USDZAR and USDTHB looking at new cycle highs (the latter especially interesting after a sharp reversal), while USDRUB has bounced sharply after posting a new low yesterday on the weakening of EM and especially oil prices.

Chart: EURUSD

EURUSD having a look at new lows for the cycle here and thus also at 12-month lows. We have also marked the prior two breaks to show how the last two break attempts lower failed to lead anywhere – let’s see if the move can develop.

Chart: USDCAD

Bulls were burned on the last attempt by this pair to break higher; we’ll reserve judgment and post a signal on our tracker if the pair manages a solid close here solidly above 1.3500.

Chart: USDZAR

Emerging market currencies have taken the USD strength reasonably in stride lately, but USDZAR has bounced back today and is looking at the highs for the cycle again – we mark both the 19-day and 49-day highs here.

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.