Forex Technical Analysis based on experience and research.

Monday, August 21, 2017

Forex Metrics and Chart Week 34 / 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 CAD(4X) followed by the AUD(2X) with the EUR(2X). The weaker currencies are the GBP(5X) followed by the USD(3X).
By diversifying a nice combination can be traded in the coming week like e.g.:
  • GBP/CAD with the AUD/USD
  • GBP/AUD with the USD/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 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 06 August 2017 and is provided here for reference purposes:
Strong: EUR and NZD. The preferred range is from 7 to 8.
Neutral: AUD, CAD and CHF. The preferred range is 4 to 6.
Weak: USD, JPY, 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 GBP/JPY Daily chart.
Price is below the Tenkan-Sen and clearly in a downtrend, the pair made a pullback a few days ago making a high at 143,19 and may continue to consolidate for a few more days before continuing the downtrend.
  1. A nice sell opportunity would be around the level of the Tenkan-Sen around 141,50. This is also a level where around the price had some Open, Close, High and Lows and seems to be a Support turning into resistance several times. On 11 Aug. the price made a fractal (purple arrow) and succeeded to close around this level again. However on 18 Aug. price broke through this level and a pullback may occur to test this level. This would be a good entry to go short. 
  2. The target should be around the lowest recent Close where Nr. 2 is. Price has been there several times in the last days and this seems a target within reach in the short term. This is also around the current opening price for this week.
  3. The MACD is looking fine and as long as it does not cross the Signal line the set-up remains valid.
The 4H. chart may offer good information for the entry price. There is then a range of +/- 90 Pips from the levels discussed in point 1 to point 2 and taking profit there seems realistic.
  • This is a pair that fits best in Point 2 of the Comparison Table Guide which you can also read here below.
    • 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 sideway market. For that reason, the Currency Score difference cannot have a negative difference. A positive difference confirms the momentum for a short revival.
  • The GBP and JPY are both Weak currencies, the Currency Score Difference is 5.
For more information about the "Comparison Table Guide" read my other Weekly article called the "Forex Strength and Comparison".


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.