In the Currency Strength table,
the EUR was the strongest currency while the AUD was the weakest.
There
were some significant changes last week with the JPY gaining 3
points strength and the CHF and CAD gaining 2 points while the USD lost 4 points and the AUD lost 3 points. The other currencies remained around the same level of last week with a maximum change in strength of just 1 point.
______________________________________
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.
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 21 May 2017 and is provided here for reference purposes:
Strong: USD, JPY. The preferred range is from 7 to 8.
Neutral: EUR, CHF, GBP, AUD. The preferred range is from 3 to 6.
Weak: NZD, CAD. The preferred range is from 1 to 2.
When
looking at the Average 13 wks. Score we can see that the CHF is now
stronger than the AUD. The currencies are grouped together
around a level which makes clear to what classification they fit best.
Last week the AUD changed groups from being a Strong currency to a
Neutral currency. As can be
seen, the Average
13 wks. Score for the AUD is now around the levels of the Neutral
currencies. The CHF on the other hand is close to becoming a Strong
currency.
_____________________________________
Classification review
This
week we take a look at the Neutral currencies, CHF and AUD.
As can be seen, the
CHF gained a lot of strength lately and is clearly stronger than the
AUD in the last weeks. At the moment the AUD changed groups and if the
CHF remains strong it may do so also and become a Strong currency in
the coming weeks.Below you can see the Weekly Currency Score Chart with the 6 months' data as a reference.
_____________________________________
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. In doing this we apply 2 rules to make it clearer.
1. First of all, only better-classified currencies in combination with
weaker classified currencies are Approved when there is a Currency
Score difference of at least 1 in the current week.
2.
The only exception is when 2 currencies are similarly classified but
the Currency Score difference is equal to or more than 4.
3. It means that each currency should be as far apart from each other
as possible in the range from 1 to 8. The classification of the
currencies in question may change in the longer term. By using the
difference of 4 which is exact at the half of the range it seems a safe
approach for trading 2 currencies which are similarly classified.
4. Even though currencies may be in the same classification 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, CHF, JPY and GBP.
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:
AUD, NZD and CAD.
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:
EUR and USD and AUD.
______________________________________
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, May 21, 2017
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