FxTaTrader


Forex Technical Analysis based on experience and research.

Sunday, October 15, 2017

Forex Metrics and Chart Week 42 / 2017

 The Top 10 of the Ranking and Rating list for the coming week shows the following stronger currencies being well represented for going long: the AUD(4X) followed by the EUR(3X) with the GBP(3X). The weaker currencies are the CHF(3X) with the USD(3X) followed by the JPY(2X).
By diversifying a nice combination can be traded in the coming week like e.g.:
  • AUD/CHF with the GBP/JPY
  • EUR/CHF with the AUD/USD


______________________________________

Ranking and Rating list

Analysis based on TA charts for all the major currency pairs. Good luck to all. No advice, just info. Every week the Forex ranking rating list will be prepared for the weekend. All the relevant Time Frames will be analyzed and the ATR and Pip value will be set.





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For analyzing the best pairs to trade looking from a longer-term perspective the last 13 weeks Currency Classification can be used in support.
This was updated on 17 September 2017 and is provided here for reference purposes:
Strong: EUR, AUD and CAD. The preferred range is from 6 to 8.
Neutral: NZD and CHF. The preferred range is 4 to 5.
Weak: USD, JPY and GBP. The preferred range is from 1 to 3.

When comparing the 13 weeks Currency Classification with the pairs mentioned in the Ranking List above some would then become less interesting. On the other hand, these pairs are at the top of the list partly also because of their volatility. It seems best to take positions for a short period then and take advantage of the high price movements.
With the FxTaTrader Strategy, these pairs are not traded because these would be trades in the 4 Hour chart or in a lower Time Frame. Nevertheless, they may offer good chances for the short term trader.

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Currency Score Chart

The Currency Score analysis is one of the parameters used for the Ranking and Rating list which is published also in this article. The Currency Score is my analysis on the 8 major currencies based on the technical analysis charts using the MACD and Ichimoku indicator on 4 Time Frames: the monthly, weekly, daily and 4 hours. The result of the technical analysis is the screenshot here below.



When comparing the 13 weeks Currency Classification with the recent Currency Score, as provided in the image above, we can determine the deviations. In the article "Forex Strength and Comparison" this is analyzed in more detail.


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Chart of the Week




The Chart for this week is the EUR/NZD 8 Hour chart.
Price is having a strong pullback after making a recent high at 1,6759. It is now consolidating at a support level around 1,6450. It may continue to consolidate in the coming period and recover towards the Kijun-Sen.
  1. A nice buy opportunity would be after a recovery where price will be between the yellow dotted support line (Nr.1) and the Kijun-Sen at 1,6552.
    The PSAR does not need to turn positive in the 8 H. chart as long as it remains positive in the Daily Chart.
    By preference, the candlesticks should show a good pattern that confirms the entry. This could be e.g. one of the reversal Candlesticks patterns. Check e.g. the following link for more information: Bulkowski's Top 10 Reversal Candlesticks
  2. The target should be around the yellow dotted line (Nr. 2) which is a resistance level.
  3. After the recovery, between the yellow dotted line and the Kijun-Sen as mentioned in point 1, the MACD should show strength in the MACD minus Signal, these are the Blue and Red bars. Either the red bars should become smaller or the blue bars larger. The MACD should stay above the zero line.
In case of a stronger pullback with price going far below the yellow dotted support line with the MACD not recovering the set-up is no more valid.
A stop-loss should be placed near 
the yellow dotted support line keeping in mind that there is already some space toward the Kijun-Sen.
  • This is a pair that fits best in Point 1 of the Comparison Table Guide. For more information read my other Weekly article called the "Forex Strength and Comparison".
  • The EUR is a Strong currency and the NZD is a Neutral currency. The Currency Score Difference is 3.
The set-up mentioned remains valid as long as the pair remains in the Top 10 of the coming Weekly Ranking and Rating lists and continues to comply with the point of the Comparison Table Guide mentioned above.


______________________________________

Besides this article, I also use the Forex "Strength and Comparison" which is also available once a week on my blog. In that article, we look in more detail at the relative position of the currencies and pairs. We will look in more detail at the interesting pairs from a longer term perspective for trading in the Daily and Weekly chart. We will use the information from this article, "Ranking, Rating and Score", and analyze it further in more detail.

It is recommended to read the page "Currency score explained", "Introduction to the FxTaTrader Forex Models" and "Statistics and Probabilities" for a better understanding of the article. If you would like to use this article, then mention the source by providing the URL FxTaTrader.com or the direct link to this article. Good luck in the coming week.

______________________________________

DISCLAIMER: The articles are my personal opinion, not recommendations, FX trading is risky and not suitable for everyone. The content is for educational purposes only and is aimed solely for the use by ‘experienced’ traders in the FOREX market as the contents are intended to be understood by professional users who are fully aware of the inherent risks in forex trading. The content is for 'Forex Trading Journal' purpose only. Nothing should be construed as a recommendation to purchase any financial instruments. The choice and risk are always yours. Thank you.

Forex Strength and Comparison Week 42 / 2017

In the Currency Strength table, the AUD was the strongest currency while the CHF was the weakest. There were some significant changes last week with the AUD gaining 5 points, the GBP gaining 4 points, the NZD gaining 3 points, the USD and CHF losing 4 points. The other currencies remained around the same level of last week with a maximum change in the strength of just 2 points.

The AUD showed a very strong performance at the end of the week against all the currencies.
This is a Strong currency and fits exactly with the current performance in the Classification and Score that it has and may offer good opportunities to trade long in the coming week.

The USD and the CHF
showed a very weak performance at the end of the week against all the currencies with the USD being slightly weaker. These are resp. Weak and Neutral currencies and the USD fits exactly with the current performance in the Classification and Score that it has and may offer good opportunities to trade short in the coming week.



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 13 Weeks Currency Score Strength

The 13 Weeks Currency Strength and the 13 Weeks Average are provided here below. This data and the "13 weeks Currency Classification" are considered for deciding on the preferred range. Because it is not ideal nor desired to change the range for a currency every single week, we perform several checks to avoid this.
  1. First of all the strength over a period of the last 13 weeks is considered. See each row for more information.
  2. Next, the 13 weeks average is considered, see the last row called "Avg. 13 wks."
  3. The number of weeks that a currency was stronger than another currency can also be considered.
  4. The Technical Analysis (TA) Charts for each Time Frame could also be consulted.



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Average 13 wks. Score

When looking at the Average 13 wks. Score we can see the currencies grouped together according to their classification.
There may be some doubt and in that case it could be a currency that will change its classification in the coming weeks. There are no such currencies at the moment.
  • Strong - We can see that the EUR, AUD and the CAD are clearly grouped together as Strong currencies around an Average 13 wks. Score of 5 to 7
    • The EUR is the strongest currency and continues to deliver high Scores while the AUD, being a Strong currency, is showing a bit of weakness in the previous weeks but recoverd well last week with a Score of 8.
  • Neutral - The NZD and CHF are grouped together around an Average 13 wks. Score of 4.
    • The CHF is the weakest currency of this week. 
  • Weak - The USD, JPY and GBP are grouped together around an Average 13 wks. Score of 3.
    • The GBP showed again a lot of strength last week with a score of 6. The USD remains the weakest currency.


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Classification review

This week we take a look at the Strong currencies. We can see that the EUR has a very stable performance with high Scores. The CAD had a dip towards the Neutral range and seems to recover.
The AUD showed a lot of weakness lately but recovered last Week with a Score of 8. According to the Avg. 13 wks. it remains a Strong currency for now!
Below you can see the Weekly Currency Score Chart with the 6 months' data as a reference.

For analyzing the best pairs to trade looking from a longer-term perspective the last 13 weeks Currency Classification can be used in support.
This was updated on 17 September 2017 and is provided here for reference purposes:
Strong: EUR, AUD and CAD. The preferred range is from 6 to 8.
Neutral: NZD and CHF. The preferred range is 4 to 5.
Weak: USD, JPY and GBP. The preferred range is from 1 to 3.


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Currency Score Comparison

 "Comparison table" and the "Ranking and Rating list"

The Forex Currency Comparison Table compares each currency with its counterpart based on the Currency Score. For more information about the currency Score of this week, you can read the article "Forex Ranking, Rating and Score" which is published every week together with this article.
By using the comparison table directly below you can get a view without the volatility and statistics as opposed to the "Ranking and Rating list". Only the strength of each currency against the counterparts is analyzed by using the Technical analysis charts of the 4 Time Frames that are also used for the "Ranking and Rating List".
The information from the Comparison Table is the source for calculating the "Ranking and Rating List" where this list additionally uses the volatility and statistics for creating the best and worst performer in the list from number 1 to 28.

The information is published once a week and be aware that rates change during this period. The mentioned scores also change and different opportunities may show up. There are many ways to follow the rate changes. This can be done e.g. by looking at the charts and checking e.g. the Ichimoku and/or MACD in the Weekly and Daily chart. There are also many tools, apps and websites where the movement of trading rates of currencies is shown in different automated ways. This may be in pips or through percentage differences or by comparing the values of indicators like the RSI, Moving Averages, MACD, Ichimoku etc. On my blog a Heatmap is available that can be of use also.





"Comparison table" and the "Currency Score Chart"

The additional value of this table compared to the Currency Score table is that the Comparison Table compares the strength between the currencies of each pair. By subtracting the strength of the weaker currency from the stronger currency we have a way to compare each pair combination.
The comparison table provides a way to compare currencies from a longer-term perspective of 13 weeks and also simultaneously taking the current trend into account. By coloring the currencies in the X and Y axis according to their Classification we can show what the best combinations are.


Comparison table Guide
  1. First of all better-classified currencies in combination with weaker-classified currencies can always be traded and vice versa. The Currency Score difference may be negative. In that case, the trade should be made after a pullback. In other words, a trade can then only take place after a recovery and the main trend being confirmed again.
  2. Second, only equally classified currencies are approved when there is a positive Currency Score difference. Also here, the trend has to be confirmed again.
    The difference between point 2 and 1 is that the long trend is not clear with 2 equally qualified currencies because that pair is in a sideways market. For that reason, the Currency Score difference cannot have a negative difference. A positive difference confirms the momentum for a short revival.
  3. Third, only Neutral currencies are Approved against a better-classified currency when there is a Currency Score difference of at least +4. In the case of a currency worse classified, the Currency Score difference has to be at least -4.
    The above-mentioned situations applicable to this point may happen when there is a clear reversal and the chart is showing a new trend with good entries in the new direction. The difference between point 3 and the previous 2 points is that with point 3 a reversal in the whole market is possible when looking at all the currencies together. This gives a better chance when a trend reversal takes place compared to point 1 and 2!
  4. By preference, each currency should be selected for a trade with a score difference as far apart from each other as possible in the range from 1 to 8. However, these opportunities are rare and for that reason point 1 offers flexibility and is the best choice to trade, point 2 is the second best and point 3 is the third best choice.
  5. The classification of the currencies in question may change in the longer term. Even though currencies may be in the same category a currency may be in a weaker/stronger period and may even change its classification in the future. See the current classification for the coming period at the beginning of this article.


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Putting the pieces together

Based on the last "13 Weeks currency classification" and the "Currency Comparison Table" the most interesting currencies for going long seem to be the:
AUD, CAD and CAD.

These are Strong or Neutral currencies from a longer term perspective when looking at the last "13 Weeks currency classification".

For going short the same analysis can be done and the following currencies seem to fit best:
CHF, JPY and USD.
These are Weak or Neutral currencies from a longer term perspective.

Currencies with a high deviation seem less interesting to trade because they are less predictable. A good example now is/are e.g. the:
GBP and CHF.



______________________________________

Besides this article, I also use the Forex "Ranking, Rating and Score" which is also available once a week on my blog. In the article "Ranking, Rating and Score" we look in more detail at the absolute position of the currencies and pairs.

It is recommended to read the page "Currency score explained", "Introduction to the FxTaTrader Forex Models" and "Statistics and Probabilities" for a better understanding of the article. If you would like to use this article then mention the source by providing the URL FxTaTrader.com or the direct link to this article. Good luck in the coming week.

______________________________________

DISCLAIMER: The articles are my personal opinion, not recommendations, FX trading is risky and not suitable for everyone. The content is for educational purposes only and is aimed solely for the use by ‘experienced’ traders in the FOREX market as the contents are intended to be understood by professional users who are fully aware of the inherent risks in forex trading. The content is for 'Forex Trading Journal' purpose only. Nothing should be construed as a recommendation to purchase any financial instruments. The choice and risk are always yours. Thank you.

Sunday, October 8, 2017

Forex Strength and Comparison Week 41 / 2017

In the Currency Strength table, the EUR was again the strongest currency while the NZD was the weakest. There were some significant changes last week with the JPY gaining 3 points, the CAD gaining 2 points, the GBP losing 3 points and the CHF with the NZD losing 2 points. The other currencies remained around the same level of last week with a maximum change in the strength of just 1 point.

The USD and the JPY showed a very strong performance at the end of the week against all the currencies with the USD being slightly stronger. These are weak currencies and may for that reason be difficult to trade as the stronger currencies in the coming week.
The GBP and the NZD showed a very weak performance at the end of the week against all the currencies with the GBP being slightly weaker. These currencies fit exactly with their current performance in the Classification and Score that they have and may offer good opportunities to be traded against in the coming week.

The EUR showed a stable performance during the week and remains strong for several weeks. This currency may offer good opportunities when trading against the GBP and NZD.



______________________________________

 13 Weeks Currency Score Strength

The 13 Weeks Currency Strength and the 13 Weeks Average are provided here below. This data and the "13 weeks Currency Classification" are considered for deciding on the preferred range. Because it is not ideal nor desired to change the range for a currency every single week, we perform several checks to avoid this.
  1. First of all the strength over a period of the last 13 weeks is considered. See each row for more information.
  2. Next, the 13 weeks average is considered, see the last row called "Avg. 13 wks."
  3. The number of weeks that a currency was stronger than another currency can also be considered.
  4. The Technical Analysis (TA) Charts for each Time Frame could also be consulted.



_____________________________________

Average 13 wks. Score

When looking at the Average 13 wks. Score we can see the currencies grouped together according to their classification.
There may be some doubt and in that case it could be a currency that 
will change its classification in the coming weeks. There are no such currencies at the moment.
  • Strong - We can see that the EUR, AUD and the CAD are clearly grouped together as Strong currencies around an Average 13 wks. Score of 5 to 6
    • The EUR is the strongest currency and continues to deliver high Scores while the AUD, being a Strong currency, is showing a bit of weakness in the last 5 weeks and especially in the last 3 weeks with scores in the range of Weak currencies.
  • Neutral - The NZD and CHF are grouped together around an Average 13 wks. Score of 4.
    • The NZD is the weakest currency of this week. 
  • Weak - The USD, JPY and GBP are grouped together around an Average 13 wks. Score of 3.
    • The USD showed again a lot of strength last week with a score of 7 but lost a lot of strength in the previous weeks and is the Weakest currency of all, this was the GBP for a long time.


_____________________________________

Classification review

This week we take a look at the Strong currencies. We can see that the EUR has a very stable performance with high Scores. The CAD had a dip towards the Neutral range and seems to recover.
The AUD is showing a lot of weakness lately but according to the Avg. 13 wks. it remains a Strong currency for now! If the weak performance continues it will become a neutral currency in the coming weeks.
Below you can see the Weekly Currency Score Chart with the 6 months' data as a reference.



For analyzing the best pairs to trade looking from a longer-term perspective the last 13 weeks Currency Classification can be used in support.
This was updated on 17 September 2017 and is provided here for reference purposes:
Strong: EUR, AUD and CAD. The preferred range is from 6 to 8.
Neutral: NZD and CHF. The preferred range is 4 to 5.
Weak: USD, JPY and GBP. The preferred range is from 1 to 3.


_____________________________________

Currency Score Comparison

 "Comparison table" and the "Ranking and Rating list"

The Forex Currency Comparison Table compares each currency with its counterpart based on the Currency Score. For more information about the currency Score of this week, you can read the article "Forex Ranking, Rating and Score" which is published every week together with this article.
By using the comparison table directly below you can get a view without the volatility and statistics as opposed to the "Ranking and Rating list". Only the strength of each currency against the counterparts is analyzed by using the Technical analysis charts of the 4 Time Frames that are also used for the "Ranking and Rating List".
The information from the Comparison Table is the source for calculating the "Ranking and Rating List" where this list additionally uses the volatility and statistics for creating the best and worst performer in the list from number 1 to 28.

The information is published once a week and be aware that rates change during this period. The mentioned scores also change and different opportunities may show up. There are many ways to follow the rate changes. This can be done e.g. by looking at the charts and checking e.g. the Ichimoku and/or MACD in the Weekly and Daily chart. There are also many tools, apps and websites where the movement of trading rates of currencies is shown in different automated ways. This may be in pips or through percentage differences or by comparing the values of indicators like the RSI, Moving Averages, MACD, Ichimoku etc. On my blog a Heatmap is available that can be of use also.








"Comparison table" and the "Currency Score Chart"

The additional value of this table compared to the Currency Score table is that the Comparison Table compares the strength between the currencies of each pair. By subtracting the strength of the weaker currency from the stronger currency we have a way to compare each pair combination.
The comparison table provides a way to compare currencies from a longer-term perspective of 13 weeks and also simultaneously taking the current trend into account. By coloring the currencies in the X and Y axis according to their Classification we can show what the best combinations are.


Comparison table Guide
  1. First of all better-classified currencies in combination with weaker-classified currencies can always be traded and vice versa. The Currency Score difference may be negative. In that case, the trade should be made after a pullback. In other words, a trade can then only take place after a recovery and the main trend being confirmed again.
  2. Second, only equally classified currencies are approved when there is a positive Currency Score difference. Also here, the trend has to be confirmed again.
    The difference between point 2 and 1 is that the long trend is not clear with 2 equally qualified currencies because that pair is in a sideways market. For that reason, the Currency Score difference cannot have a negative difference. A positive difference confirms the momentum for a short revival.
  3. Third, only Neutral currencies are Approved against a better-classified currency when there is a Currency Score difference of at least +4. In the case of a currency worse classified, the Currency Score difference has to be at least -4.
    The above-mentioned situations applicable to this point may happen when there is a clear reversal and the chart is showing a new trend with good entries in the new direction. The difference between point 3 and the previous 2 points is that with point 3 a reversal in the whole market is possible when looking at all the currencies together. This gives a better chance when a trend reversal takes place compared to point 1 and 2!
  4. By preference, each currency should be selected for a trade with a score difference as far apart from each other as possible in the range from 1 to 8. However, these opportunities are rare and for that reason point 1 offers flexibility and is the best choice to trade, point 2 is the second best and point 3 is the third best choice.
  5. The classification of the currencies in question may change in the longer term. Even though currencies may be in the same category a currency may be in a weaker/stronger period and may even change its classification in the future. See the current classification for the coming period at the beginning of this article.


______________________________________

Putting the pieces together

Based on the last "13 Weeks currency classification" and the "Currency Comparison Table" the most interesting currencies for going long seem to be the:
EUR, CAD and CHF.

These are Strong or Neutral currencies from a longer term perspective when looking at the last "13 Weeks currency classification".

For going short the same analysis can be done and the following currencies seem to fit best:
NZD, GBP and JPY.
These are Weak or Neutral currencies from a longer term perspective.

Currencies with a high deviation seem less interesting to trade because they are less predictable. A good example now is/are e.g. the:
AUD and USD.



______________________________________

Besides this article, I also use the Forex "Ranking, Rating and Score" which is also available once a week on my blog. In the article "Ranking, Rating and Score" we look in more detail at the absolute position of the currencies and pairs.

It is recommended to read the page "Currency score explained", "Introduction to the FxTaTrader Forex Models" and "Statistics and Probabilities" for a better understanding of the article. If you would like to use this article then mention the source by providing the URL FxTaTrader.com or the direct link to this article. Good luck in the coming week.

______________________________________

DISCLAIMER: The articles are my personal opinion, not recommendations, FX trading is risky and not suitable for everyone. The content is for educational purposes only and is aimed solely for the use by ‘experienced’ traders in the FOREX market as the contents are intended to be understood by professional users who are fully aware of the inherent risks in forex trading. The content is for 'Forex Trading Journal' purpose only. Nothing should be construed as a recommendation to purchase any financial instruments. The choice and risk are always yours. Thank you.

Forex Metrics and Chart Week 41 / 2017

The Top 10 of the Ranking and Rating list for the coming week shows the following stronger currencies being well represented for going long: the EUR(3X) with the USD(3X) and the CAD(3X). The weaker currencies are the NZD(4X) followed by the AUD(3X) and the GBP(2X).
By diversifying a nice combination can be traded in the coming week like e.g.:
  • EUR/NZD with the GBP/USD
  • NZD/USD with the EUR/AUD


______________________________________

Ranking and Rating list

Analysis based on TA charts for all the major currency pairs. Good luck to all. No advice, just info. Every week the Forex ranking rating list will be prepared for the weekend. All the relevant Time Frames will be analyzed and the ATR and Pip value will be set.





______________________________________

For analyzing the best pairs to trade looking from a longer-term perspective the last 13 weeks Currency Classification can be used in support.
This was updated on 17 September 2017 and is provided here for reference purposes:
Strong: EUR, AUD and CAD. The preferred range is from 6 to 8.
Neutral: NZD and CHF. The preferred range is 4 to 5.
Weak: USD, JPY and GBP. The preferred range is from 1 to 3.

When comparing the 13 weeks Currency Classification with the pairs mentioned in the Ranking List above some would then become less interesting. On the other hand, these pairs are at the top of the list partly also because of their volatility. It seems best to take positions for a short period then and take advantage of the high price movements.
With the FxTaTrader Strategy, these pairs are not traded because these would be trades in the 4 Hour chart or in a lower Time Frame. Nevertheless, they may offer good chances for the short term trader.

______________________________________

Currency Score Chart

The Currency Score analysis is one of the parameters used for the Ranking and Rating list which is published also in this article. The Currency Score is my analysis on the 8 major currencies based on the technical analysis charts using the MACD and Ichimoku indicator on 4 Time Frames: the monthly, weekly, daily and 4 hours. The result of the technical analysis is the screenshot here below.


When comparing the 13 weeks Currency Classification with the recent Currency Score, as provided in the image above, we can determine the deviations. In the article "Forex Strength and Comparison" this is analyzed in more detail.


______________________________________

Chart of the Week



The Chart for this week is the NZD/USD 8 Hour chart.
Price is clearly in a downtrend and made a low lately at 0,7059. It is now consolidating above that level and it may continue to consolidate in the coming period and also have a pullback towards the Tenkan-Sen and possibly the Kijun-Sen. 
  1. A nice sell opportunity would be after a pullback around the level of the Kijun-Sen at 0.7151 and the yellow dotted line. This seems to be a resistance where price found support before breaking through. The PSAR will turn positive when price reaches that level and by preference the PSAR should turn negative again. Also, by preference the candlesticks should show a good pattern that confirms the entry. This could be e.g. one of the reversal Candlesticks patterns. Check e.g. the following link for more information: Bulkowski's Top 10 Reversal Candlesticks
  2. The target should be above the latest recent low at 0,7059.
  3. After the pullback, towards the Kijun-Sen or the yellow dotted line, the MACD should show weakness in the MACD minus Signal, these are the Blue and Red bars. Either the red bars should become larger or the blue bars shorter. The MACD should stay below the zero line.
In case of a stronger pullback with price going far above the Kijun-Sen and the MACD not recovering the set-up is no more valid.
A stop-loss should be above the Kijun-Sen and the yellow dotted line keeping in mind some space for the price to pick up the downtrend again in case of the anticipated pullback.

  • This is a pair that fits best in Point 3 of the Comparison Table Guide. For more information read my other Weekly article called the "Forex Strength and Comparison".
  • The NZD is a Neutral currency and the USD is a Weak currency. The Currency Score Difference is -6.
The set-up mentioned remains valid as long as the pair remains in the Top 10 of the coming Weekly Ranking and Rating lists and continues to comply with the point of the Comparison Table Guide mentioned above.


______________________________________

Besides this article, I also use the Forex "Strength and Comparison" which is also available once a week on my blog. In that article, we look in more detail at the relative position of the currencies and pairs. We will look in more detail at the interesting pairs from a longer term perspective for trading in the Daily and Weekly chart. We will use the information from this article, "Ranking, Rating and Score", and analyze it further in more detail.

It is recommended to read the page "Currency score explained", "Introduction to the FxTaTrader Forex Models" and "Statistics and Probabilities" for a better understanding of the article. If you would like to use this article, then mention the source by providing the URL FxTaTrader.com or the direct link to this article. Good luck in the coming week.

______________________________________

DISCLAIMER: The articles are my personal opinion, not recommendations, FX trading is risky and not suitable for everyone. The content is for educational purposes only and is aimed solely for the use by ‘experienced’ traders in the FOREX market as the contents are intended to be understood by professional users who are fully aware of the inherent risks in forex trading. The content is for 'Forex Trading Journal' purpose only. Nothing should be construed as a recommendation to purchase any financial instruments. The choice and risk are always yours. Thank you.

Tuesday, October 3, 2017

Forex Metrics and Chart Month October 2017

The Top 10 of the Ranking and Rating list for the coming month shows the following stronger currencies being well represented for going long: the EUR(4X) with the CAD(4X). The weaker currencies are the JPY(4X) followed by the NZD(2X) and the AUD(2X).
By diversifying a nice combination can be traded in the coming month like e.g.:

  • EUR/NZD with the CAD/JPY
  • EUR/JPY with the AUD/CAD

______________________________________

Ranking and Rating list

Analysis based on TA charts for all the major currency pairs. Good luck to all. No advice, just info. Every month the Forex ranking rating list will be prepared around the change of the month. All the relevant Time Frames will be analyzed and the ATR and Pip value will be set.






______________________________________

For analyzing the best pairs to trade looking from a longer-term perspective the last 12 months Currency Classification can be used in support.
This was updated on 1 October 2017 and is provided here for reference purposes: 
Strong: USD, NZD, AUD. The preferred range is from 6 to 8.
Neutral: EUR, CAD, CHF. The preferred range is from 3 to 5.
Weak: JPY, GBP. The preferred range is 1 to 2.

When comparing the 12 months Currency Classification with the pairs mentioned in the Ranking List above some would then become less interesting. On the other hand, these pairs are at the top of the list partly also because of their volatility. It seems best to take positions for a short period then and take advantage of the high price movements.
With the FxTaTrader Strategy, these pairs are not traded because these would be trades in the 4 Hour chart or in a lower Time Frame. Nevertheless, they may offer good chances for the short term trader.

______________________________________

Currency Score Chart

The Currency Score analysis is one of the parameters used for the Ranking and Rating list which is published also in this article. The Currency Score is my analysis on the 8 major currencies based on the technical analysis charts using the MACD and Ichimoku indicator on 4 Time Frames: the monthly, weekly, daily and 4 hours. The result of the technical analysis is the screenshot here below.



When comparing the 12 months Currency Classification with the recent Currency Score, as provided in the image above, we can determine the deviations. In the article "Forex Strength and Comparison" this is analyzed in more detail.


______________________________________

Chart of the Month




The Chart for this month is the AUD/JPY Daily chart.
Price is clearly in an uptrend and made a high lately at 90,30. It is now consolidating below that level and around the Kijun-Sen. It may continue to consolidate in the coming period. 
  1. A nice buy opportunity would be around the current level and the Kijun-Sen. By preference the candlesticks should show a good pattern that confirms the entry. This could be the Engulfing pattern, Morningstar etc. etc. Check e.g. the following link for more information: Bulkowski's Top 10 Reversal Candlesticks. 
  2. The target should be below the latest recent high at 90,30.
  3. The MACD should show strength in the MACD minus Signal, these are the Blue and Red bars. Either the red bars should become shorter or the blue bars larger. The MACD should stay above the zero line.
In case of a stronger pullback with price going far below the Kijun-Sen and the MACD not recovering the set-up is no more valid.
A stop-loss should be below the Kijun-Sen keeping in mind some space for the price to recover in case of the anticipated pullback going around the Kijun-Sen.

  • This is a pair that fits best in Point 1 of the Comparison Table Guide. For more information read my other Monthly article called the "Forex Strength and Comparison".
  • The AUD is a strong currency and the JPY a Weak currency. The Currency Score Difference is 2.
The set-up mentioned remains valid as long as the pair remains in the Top 10 of the coming Monthly Ranking and Rating lists and continues to comply with the point of the Comparison Table Guide mentioned above.


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Besides this article, I also use the Forex "Strength and Comparison" which is also available once a month on my blog. In that article, we look in more detail at the relative position of the currencies and pairs. We will look in more detail at the interesting pairs from a longer term perspective for trading in the Daily and Weekly chart. We will use the information from this article, "Ranking, Rating and Score", and analyze it further in more detail.

It is recommended to read the page "Currency score explained", "Introduction to the FxTaTrader Forex Models" and "Statistics and Probabilities" for a better understanding of the article. If you would like to use this article, then mention the source by providing the URL FxTaTrader.com or the direct link to this article. Good luck in the coming month.

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DISCLAIMER: The articles are my personal opinion, not recommendations, FX trading is risky and not suitable for everyone.The content is for educational purposes only and is aimed solely for the use by ‘experienced’ traders in the FOREX market as the contents are intended to be understood by professional users who are fully aware of the inherent risks in forex trading. The content is for 'Forex Trading Journal' purpose only. Nothing should be construed as a recommendation to purchase any financial instruments. The choice and risk are always yours. Thank you.

Forex Strength And Comparison October 2017

In the Currency Strength table, the EUR was again the strongest currency while the JPY was the weakest. There were some significant changes last month with the GBP gaining 5 points, the AUD losing 3 points and the JPY losing 2 points. The other currencies remained around the same level of last month with a maximum change in the strength of just 1 point.



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 12 Months Currency Score Strength

The 12 Months Currency Strength and the 12 Months Average are provided here below. This data and the "12 months Currency Classification" are considered for deciding on the preferred range. Because it is not ideal nor desired to change the range for a currency every single month, we perform several checks to avoid this.

  1. First of all the strength over a period of the last 12 months is considered. See each row for more information.
  2. Next, the 12 months average is considered, see the last row called "Avg. 12 M."
  3. The number of months that a currency was stronger than another currency can also be considered.
  4. The Technical Analysis (TA) Charts for each Time Frame could also be consulted.




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Average 12 M. Score

When looking at the Average 12 M.. Score we can see the currencies grouped together according to their classification.
There may be some doubt and in that case it could be a currency that 
will change its classification in the coming months. The JPY is such a currency that changes last month from Neutral to Weak.
  • Strong - We can see that the USD, AUD and the NZD are clearly grouped together as Strong currencies around an Average 12 M. Score of 5
    • The USD is the strongest currency and continues to deliver high Scores while the AUD, being a Strong currency, is showing a bit of weakness in the last month.
  • Neutral - The EUR, CHF and CAD are grouped together around an Average 13 wks. Score of 4.
    • The EUR showed a very high Score in the last 5 months followed by the CAD. The CHF remained in the middle of the range in the last 12 months. 
  • Weak - The JPY and GBP are grouped together around an Average 13 wks. Score of 3.
    • The GBP showed a lot of strength last month with a score of 6 but lost a lot of strength in the previous months. The JPY was a Neutral currency but showed a very bad performance in the last months.


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Classification review

This month we take a look at the Weak currencies. We can see that the GBP gained a lot of strength in the last month. It is the strongest one of the Weak group. The JPY was a Strong currency but because of the bad performance lately it is now a Weak currency.Below you can see the Monthly Currency Score Chart with the 12 months' data as a reference.




For analyzing the best pairs to trade looking from a longer-term perspective the last 12 months Currency Classification can be used in support.
This was updated on 1 October 2017 and is provided here for reference purposes: 
Strong: USD, NZD, AUD. The preferred range is from 6 to 8.
Neutral: EUR, CAD, CHF. The preferred range is from 3 to 5.
Weak: JPY, GBP. The preferred range is 1 to 2.



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Currency Score Comparison

 "Comparison table" and the "Ranking and Rating list"

The Forex Currency Comparison Table compares each currency with its counterpart based on the Currency Score. For more information about the currency Score of this month, you can read the article "Forex Ranking, Rating and Score" which is published every month together with this article.
By using the comparison table directly below you can get a view without the volatility and statistics as opposed to the "Ranking and Rating list". Only the strength of each currency against the counterparts is analyzed by using the Technical analysis charts of the 4 Time Frames that are also used for the "Ranking and Rating List".
The information from the Comparison Table is the source for calculating the "Ranking and Rating List" where this list additionally uses the volatility and statistics for creating the best and worst performer in the list from number 1 to 28.

The information is published once a month and be aware that rates change during this period. The mentioned scores also change and different opportunities may show up. There are many ways to follow the rate changes. This can be done e.g. by looking at the charts and checking e.g. the Ichimoku and/or MACD in the Monthly and Weekly chart. There are also many tools, apps and websites where the movement of trading rates of currencies is shown in different automated ways. This may be in pips or through percentage differences or by comparing the values of indicators like the RSI, Moving Averages, MACD, Ichimoku etc. On my blog a Heatmap is available that can be of use also.








"Comparison table" and the "Currency Score Chart"

The additional value of this table compared to the Currency Score table is that the Comparison Table compares the strength between the currencies of each pair. By subtracting the strength of the weaker currency from the stronger currency we have a way to compare each pair combination.
The comparison table provides a way to compare currencies from a longer-term perspective of 12 months and also simultaneously taking the current trend into account. By coloring the currencies in the X and Y axis according to their Classification we can show what the best combinations are.


Comparison table Guide
  1. First of all better-classified currencies in combination with weaker-classified currencies can always be traded and vice versa. The Currency Score difference may be negative. In that case, the trade should be made after a pullback. In other words, a trade can then only take place after a recovery and the main trend being confirmed again.
  2. Second, only equally classified currencies are approved when there is a positive Currency Score difference. Also here, the trend has to be confirmed again.
    The difference between point 2 and 1 is that the long trend is not clear with 2 equally qualified currencies because that pair is in a sideways market. For that reason, the Currency Score difference cannot have a negative difference. A positive difference confirms the momentum for a short revival.
  3. Third, only Neutral currencies are Approved against a better-classified currency when there is a Currency Score difference of at least +4. In the case of a currency worse classified, the Currency Score difference has to be at least -4.
    The above-mentioned situations applicable to this point may happen when there is a clear reversal and the chart is showing a new trend with good entries in the new direction. The difference between point 3 and the previous 2 points is that with point 3 a reversal in the whole market is possible when looking at all the currencies together. This gives a better chance when a trend reversal takes place compared to point 1 and 2!
  4. By preference, each currency should be selected for a trade with a score difference as far apart from each other as possible in the range from 1 to 8. However, these opportunities are rare and for that reason point 1 offers flexibility and is the best choice to trade, point 2 is the second best and point 3 is the third best choice.
  5. The classification of the currencies in question may change in the longer term. Even though currencies may be in the same category a currency may be in a weaker/stronger period and may even change its classification in the future. See the current classification for the coming period at the beginning of this article.


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Putting the pieces together

Based on the last "12 Months currency classification" and the "Currency Comparison Table" the most interesting currencies for going long seem to be the:
EUR and CAD.
These are Strong or Neutral currencies from a longer term perspective when looking at the last "12 Months currency classification".

For going short the same analysis can be done and the following currencies seem to fit best:
JPY.
These are Weak or Neutral currencies from a longer term perspective.

Currencies with a high deviation seem less interesting to trade because they are less predictable. A good example now is/are e.g. the:
GBP, AUD and NZD.



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Besides this article, I also use the Forex "Ranking, Rating and Score" which is also available once a month on my blog. In the article "Ranking, Rating and Score" we look in more detail at the absolute position of the currencies and pairs.

It is recommended to read the page "Currency score explained", "Introduction to the FxTaTrader Forex Models" and "Statistics and Probabilities" for a better understanding of the article. If you would like to use this article then mention the source by providing the URL FxTaTrader.com or the direct link to this article. Good luck in the coming month.

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DISCLAIMER: The articles are my personal opinion, not recommendations, FX trading is risky and not suitable for everyone.The content is for educational purposes only and is aimed solely for the use by ‘experienced’ traders in the FOREX market as the contents are intended to be understood by professional users who are fully aware of the inherent risks in forex trading. The content is for 'Forex Trading Journal' purpose only. Nothing should be construed as a recommendation to purchase any financial instruments. The choice and risk are always yours. Thank you.

Sunday, October 1, 2017

Forex Metrics and Chart Week 40 / 2017

The Top 10 of the Ranking and Rating list for the coming week shows the following stronger currencies being well represented for going long: the GBP(4X) followed by the EUR(3X) and the CHF(2X). The weaker currencies are the JPY(4X) followed by the AUD(2X) with the NZD(2X)
  • EUR/AUD with the GBP/JPY
  • CHF/JPY with the EUR/NZD

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Ranking and Rating list

Analysis based on TA charts for all the major currency pairs. Good luck to all. No advice, just info. Every week the Forex ranking rating list will be prepared for the weekend. All the relevant Time Frames will be analyzed and the ATR and Pip value will be set.





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For analyzing the best pairs to trade looking from a longer-term perspective the last 13 weeks Currency Classification can be used in support.
This was updated on 17 September 2017 and is provided here for reference purposes:
Strong: EUR, AUD and CAD. The preferred range is from 6 to 8.
Neutral: NZD and CHF. The preferred range is 4 to 5.
Weak: USD, JPY and GBP. The preferred range is from 1 to 3.

When comparing the 13 weeks Currency Classification with the pairs mentioned in the Ranking List above some would then become less interesting. On the other hand, these pairs are at the top of the list partly also because of their volatility. It seems best to take positions for a short period then and take advantage of the high price movements.
With the FxTaTrader Strategy, these pairs are not traded because these would be trades in the 4 Hour chart or in a lower Time Frame. Nevertheless, they may offer good chances for the short term trader.

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Currency Score Chart

The Currency Score analysis is one of the parameters used for the Ranking and Rating list which is published also in this article. The Currency Score is my analysis on the 8 major currencies based on the technical analysis charts using the MACD and Ichimoku indicator on 4 Time Frames: the monthly, weekly, daily and 4 hours. The result of the technical analysis is the screenshot here below.





When comparing the 13 weeks Currency Classification with the recent Currency Score, as provided in the image above, we can determine the deviations. In the article "Forex Strength and Comparison" this is analyzed in more detail.


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Chart of the Week






The Chart for this week is the USD/JPY 4 Hour chart.
Price is clearly in an uptrend and made a high lately at 113,25. It is now consolidating below that level and around the Tenkan-Sen. It may continue to consolidate in the coming period. 
  1. A nice buy opportunity would be after a pullback around the level of the Kijun-Sen at 112,36. By preference the PSAR should turn positive and the candlesticks should show a good pattern that confirms the entry. This could be the Engulfing pattern, Morningstar etc. etc. Check e.g. the following link for more information: Bulkowski's Top 10 Reversal Candlesticks
  2. The target should be below the latest recent high at 113,25.
  3. After the pullback to the Kijun-Sen the MACD should show strength in the MACD minus Signal, these are the Blue and Red bars. Either the red bars should become shorter or the blue bars larger. The MACD should stay above the zero line.
In case of a stronger pullback with price going far below the Kijun-Sen and the MACD not recovering the set-up is no more valid.
A stop-loss should be below the Kijun-Sen keeping in mind some space for the price to recover in case of the anticipated pullback going around the Kijun-Sen.

  • This is a pair that fits best in Point 2 of the Comparison Table Guide. For more information read my other Weekly article called the "Forex Strength and Comparison".
  • The USD and JPY are both Weak currencies. The Currency Score Difference is 4.
The set-up mentioned remains valid as long as the pair remains in the Top 10 of the coming Weekly Ranking and Rating lists and continues to comply with the point of the Comparison Table Guide mentioned above.


______________________________________

Besides this article, I also use the Forex "Strength and Comparison" which is also available once a week on my blog. In that article, we look in more detail at the relative position of the currencies and pairs. We will look in more detail at the interesting pairs from a longer term perspective for trading in the Daily and Weekly chart. We will use the information from this article, "Ranking, Rating and Score", and analyze it further in more detail.

It is recommended to read the page "Currency score explained", "Introduction to the FxTaTrader Forex Models" and "Statistics and Probabilities" for a better understanding of the article. If you would like to use this article, then mention the source by providing the URL FxTaTrader.com or the direct link to this article. Good luck in the coming week.

______________________________________

DISCLAIMER: The articles are my personal opinion, not recommendations, FX trading is risky and not suitable for everyone. The content is for educational purposes only and is aimed solely for the use by ‘experienced’ traders in the FOREX market as the contents are intended to be understood by professional users who are fully aware of the inherent risks in forex trading. The content is for 'Forex Trading Journal' purpose only. Nothing should be construed as a recommendation to purchase any financial instruments. The choice and risk are always yours. Thank you.