Forex Technical Analysis based on experience and research.

Sunday, October 22, 2017

Forex Metrics and Chart Week 43 / 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(4X) followed by the AUD(3X) and the USD(2X). The weaker currencies are the NZD(4X) followed by the JPY(3X) and the CHF(2X).
By diversifying a nice combination can be traded in the coming week like e.g.:
  • EUR/JPY with the AUD/NZD
  • NZD/USD 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 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 22 October 2017 and is provided here for reference purposes:
Strong: EUR, AUD and CAD. The preferred range is from 6 to 8.
Neutral: USD. GBP, NZD and CHF. The preferred range is 2 to 5.
Weak: JPY. The preferred range is from 1 to 1.

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 EUR/CHF 8 Hour chart.
Price is clearly in an uptrend and far from the Tenkan-Sen. A pullback is expected towards the Tenkan-Sen and possibly also below that level towards the Kijun-Sen and a support level around 1,1546.
  1. A nice buy opportunity would be after a pullback towards the Kijun-Sen and the support level around 1,1546 see the 2 yellow dotted lines (Nr.1). The PSAR will turn negative and 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 seems to be a resistance level. That is the level where the most recent highs were.
  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 below 
the yellow dotted support line. Having a Stop Loss below an important recent bottom seems a good idea. This would be in this case below the bottom of 17 October at 1,1485.
  • 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 CHF is a Neutral currency. The Currency Score Difference is 5.
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.