Forex Technical Analysis based on experience and research.

Wednesday, December 6, 2017

Forex Metrics and Chart Month December 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 GBP(4X). The weaker currencies are the NZD(4X) followed by the AUD(2X) with the JPY(2X).
By diversifying a nice combination can be traded in the coming months like e.g.:

  • GBP/NZD with the EUR/JPY
  • EUR/NZD with the GBP/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 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-termperspective the last 12 months Currency Classification can be used in support.
The CHF changed classification last month from Weak to Neutral. Here below you can see the new classification.

New Classification
This classification was updated on 6 December 2017 and is provided here for reference purposes: 
Strong: USD, EUR, CAD. The preferred range is from 6 to 8.
Neutral: AUD, NZD, 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 lower Time Frames than the 4 Hour chart. 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 EUR/NZD Weekly chart.

Price is clearly in an uptrend and made a high lately. It is now consolidating below that level and it is expected to continue to do so towards the Tenkan-Sen. The PSAR will turn negative but it is in favor of long positions and it is in the Monthly chart still positive too.

  1. A nice buy opportunity would be near the Tenkan-Sen and the Nr. 1 yellow dotted line which seems to be a good support. 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 where the Nr. 2 yellow dotted line is.
  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 yellow dotted support line with the MACD not recovering the set-up is no more valid. A stop-loss should be placed below a recent bottom and/or Support/Resistance line.
  • 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 EUR is a strong currency and the NZD a Neutral currency. The Currency Score Difference is 7.
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.


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.