FX Breakout Monitor: USD rising back to the top

Today’s FX Breakout monitor

Page 1: Note yet another low close in AUDUSD. This time it is looking more relevant as yesterday’s close more clearly poked below all prior low closes. Sterling weakness is now getting sufficiently advanced that EURGBP is poking above breakout levels as of this writing and GBPUSD isn’t far away to a breakdown level below 1.2900. Note as well that EURCHF has broken down badly over the last couple of sessions.

Page 2: Here we see few new developments, but the USD is at the upper end of the  range versus a number of the EM currencies (notable USDSGD move yesterday in sympathy with the USDCNY surge especially interesting technically – see below). As well, gold has ripped higher, perhaps linked to the CNY devaluation fears driving safe haven flows.

Chart: AUDUSD

Hard to ignore the AUDUSD breakdown signal, although the USD signal isn’t particularly clear elsewhere. Trade headlines or a strong Australian jobs report could turn the tables on the bears, but for now, the pair is seeing a notable breakdown.

Chart: GBPUSD

Cable is close to a major breakout level to the downside, the lowest prior close around 1.2900 as the clouds once again gather over the Brexit process. EURGBP has also looked at upside breakout levels today.

Chart: USDSGD

One of the more notable moves in Asian FX was USDSGD punching above the  recent range and above the 200-day moving average as all traders wonder whether the USDCNY ceiling around 7.00 will remain in effect as the US and China face off over trade issues.

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.