Forex Technical Analysis based on experience and research.

Monday, August 7, 2017

Forex Metrics and Chart Month Aug. / 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) followed by the AUD(2X) with the NZD(2X). The weaker currencies are the GBP(5X) followed by the CHF(3X).
By diversifying a nice combination can be traded in the coming month like e.g.:
  • EUR/GBP with the AUD/CHF
  • GBP/AUD with the EUR/CHF


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 2 July 2017 and is provided here for reference purposes: 
Strong: USD, NZD. The preferred range is from 7 to 8.
Neutral: JPY, AUD, CHF. The preferred range is from 4 to 6.
Weak: EUR, GBP, CAD. The preferred range is from 1 to 3.

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/USD Weekly chart.
Price is above the Tenkan-Sen and clearly in an uptrend, the pair made a high with a fractal a few weeks ago and may consolidate in the coming period a few more weeks before continuing the uptrend. The PSAR is looking fine for taking long positions and the MACD is also confirming this.
  1. A nice buy opportunity would be on pullback below the Kijun-Sen. There is a yellow dotted line at 0.7730 and that seems to be more or less the middle of the area (+/- 40 pips) where the fractals are. This is a good support area for that reason and also because it is near the Kijun-Sen which is a good support also.
  2. The MACD should go by preference around the signal line and once it gets stronger it may become interesting to look for an entry. Strength can be seen in the minus Signal (blue and red bars).
  3. A safe and realistic profit level would be below the last top. That is also where a fractal was made around the price of 0.8065.
The Daily chart may offer good information for the entry price. There is a range of +/- 250 Pips between the entry discussed in point 1 and the profit level discussed in point 3.

  • This is a pair that fits best in Point 3 of the Comparison Table Guide which you can also read here below.
    • 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!
  • The AUD is a Neutral currency and the USD a Strong currency, the Currency Score Difference is +4.
For more information about the "Comparison Table Guide" read my other Monthly article called the "Forex Strength and Comparison".


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.


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.