Forex Technical Analysis based on experience and research.

Sunday, January 14, 2018

Forex Metrics and Chart Week 3 / 2018

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 NZD(5X) followed by the AUD(2X). The weaker currencies are the USD(4X) followed by the CHF(3X).
By diversifying a nice combination can be traded in the coming week like e.g.:

  • NZD/USD with the AUD/CHF
  • EUR/USD with the NZD/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 7 January 2018 and is provided here for reference purposes:
Strong: EUR, GBP and CAD. The preferred range is from 6 to 8.
Neutral: USD and AUD. The preferred range is 4 to 5.
Weak: JPY, NZD and CHF. 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 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 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 AUD/USD 8 Hour chart and the set-up is a Long Entry.
Price is clearly in an uptrend and broke through the latest highs from October 2017. Support is expected around this level. A nice buy opportunity would be on the pullback towards the Kijun-Sen and the yellow dotted horizontal line which seems to be a good Support/Resistance level being at the level of the highs from October 2017.

  1. For a good entry, by preference:
    1. The PSAR should be positive in the Daily chart and favorable for long trades in the 8H. chart. It is positive in the Daily chart and even if it turns negative in the 8H. chart it is in favor of long positions.
    2. The pullback has still to take place and price should be gaining momentum before entering positions.
    3. The candlesticks should show a good pattern that confirms the entry. This could be e.g. one of the reversal Candlesticks patterns or a continuation pattern. Check e.g. the following links for more information: Bulkowski's Top 10 Reversal Candlesticks , Wikipedia Candlestick pattern or Investopedia Candlestick .
  2. The target should be, depending on the current set-up going long or short, below/above the latest high/low. This may be or become a resistance/support level and closing below/above that level is for that reason a good target.
  3. In case of a stronger pullback with price going far below/above the yellow dotted support line with the MACD not recovering the set-up is no more valid. A stop-loss should be placed below/above a recent top/bottom. These are levels where Resistance or Support may reside too.
  4. The MACD should show in the right direction strength in the MACD minus Signal, these are the Blue and Red bars. In case of an uptrend, the red bars should become smaller or the blue bars larger. In case of a downtrend, the red bars should become larger or the blue bars smaller. The MACD should stay above/below the zero line.
  • This is a pair that fits best in Point 2 of the Comparison Table Guide. For more information read my other Weekly article called the "Forex Strength and Comparison" and the pages Explanation Articles.
  • The AUD is a Neutral currency and the USD also. The Currency Score Difference is 6.
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.