FxTaTrader


Forex Technical Analysis based on experience and research.

Sunday, May 6, 2018

Forex Strength And Comparison May 2018

In the Currency Strength table, the JPY was the strongest currency while the CHF was the weakest. There were some significant changes last month with the USD gaining 7 points and the CAD gaining 3 points while the GBP lost 4 points, the CHF 3 points and the NZD 2 points.

When looking at the currency pairs on a month-to-month basis the USD, EUR, JPY and GBP seem to support a bullish development in the Weekly charts. From these pairs, only the GBP looks neutral in the Weekly chart while the USD, EUR and JPY look strong.
The CAD looks Neutral in the Monthly chart while it looks strong in the Weekly chart.
The AUD and CHF seem to support a bearish development in the Weekly charts.
The support in the Monthly chart may be because of a trend or a temporary pullback in the monthly chart.

Although some good performing currencies may have lost points in the Currency Strength table they remain interesting when looking at all the currencies in the table as a whole. Same for the weak currencies that may have gained points. That is why the Classification of currencies and the Currency Score comparison are important also. We will look at this in more detail.

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 12 Months Currency Score Strength

The 12 Months Currency Strength and the 12 Months Average are provided here below. For more information check the page Explanation Articles on my blog.

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Average 12 M. Score

When looking at the Average 12 M. Score we can see the currencies grouped together according to their classification.
There may be some doubt and in that case it could be a currency that will change its classification in the coming months.
  • Strong - We can see that the EUR, GBP are clearly grouped together as Strong currencies around an Average 12 M. Score of 5 to 7.
  • Neutral - The JPY, CAD and CHF are grouped together around an Average 12 M. Score of 4 to 5.
  • Weak - The USD, AUD and NZD are grouped together around an Average 12 M. Score of 3 to 4.


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Classification review

This month we take a look at the JPY and the CAD. Last month we looked at the JPY also and it was clear it had a potential to become a Neutral currency. The CHF and the JPY are currently the only Neutral currencies and have both the same Avg. 12 Month Score.
The CAD is a Neutral currency and is showing a very good performance in the last month after having Scores in the range of Weak currencies before. Based on the current Avg. 12 Month Score it can become a Strong currency soon if it keeps performing like this.

Below you can see the Monthly Currency Score Chart with the 24 months' data as a reference.



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 classification was updated on 1 May 2018 and is provided here for reference purposes: 
Strong: EUR, GBP. The preferred range is from 7 to 8.
Neutral: JPY, CAD, CHF. The preferred range is from 4 to 6.

Weak: USD, AUD, NZD. The preferred range is 1 to 3.




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Currency Score Comparison

The Forex Currency Comparison Table compares each currency with its counterpart based on the Currency Score. For more information check the page Explanation Articles on my blog. For more information about the currency Score of this month, you can read the article "Forex Ranking, Rating and Score" which is published every month together with this article.


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Putting the pieces together
Based on the analysis of this article it seems that going long with the JPY, CAD and EUR may offer the best opportunities.
For going short, the CHF, AUD and NZD seem to offer good opportunities.

The USD is still a Weak currency and for that reason, it seems not the best one to go long with even though it showed a Strong or Neutral performance.


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Besides this article, I also use the Forex "Ranking, Rating and Score" which is also available once a month on my blog. In the article "Ranking, Rating and Score" we look in more detail at the absolute position of the currencies and pairs.

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.

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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.

Forex Metrics and Chart Month May 2018

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

  • USD/CHF with the AUD/JPY
  • NZD/USD with the GBP/JPY

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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.




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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 classification was updated on 1 May 2018 and is provided here for reference purposes: 
Strong: EUR, GBP. The preferred range is from 7 to 8.
Neutral: JPY, CAD, CHF. The preferred range is from 4 to 6.

Weak: USD, AUD, NZD. The preferred range is 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.

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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.


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Chart of the Month





The Chart for this month is the CHF/JPY Weekly chart and the set-up is a Short Entry. The Daily chart is added for clarity. Price is clearly in a downtrend and gaining momentum. Price broke a few months ago through an important support level, see the yellow horizontal line, which is now a resistance at 112,50. It may pull back to that support like it did already before but as long as it does not break through this level it offers a good opportunity to go short. This should take place at the level of the Tenkan-Sen.

  1. For a good entry, by preference:
    1. The PSAR should be positive/negative in the Weekly chart, depending on the set-up. It should also be favorable for trades in the Daily chart in the direction of the set-up. It means that even if it is contrary at the moment the PSAR should show that trades in the direction of the set-up are making a better profit.
    2. The pullback has still to take place and price should be gaining momentum after the pullback 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 horizontal 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 Green and Red bars. In case of an uptrend, the green bars should be larger. In case of a downtrend, the red bars should become larger. The MACD should stay above/below the MACD Signal line and the zero 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" and the pages Explanation Articles.
  • The JPY is a Strong currency and the CHF a Weak 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.


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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.

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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.