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.


 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.


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.


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.


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.


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.


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.


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.