First let us go through the components in FX Currency Strength Radar dashboard interface and what they meant.
The Timeframes are listed in the left vertical column.
Currencies (not pairs) are ranked according to their strength/weakness. The weakest currency on the left and the strongest currency on the right.
The weakness/strength of the currencies is further differentiated by their tones.
Dark Red: very weak.
Pale Red: relatively weak.
Gray: neutral
Light Green: relatively strong
Dark Green: Very strong
A Currency Score is given to each currency in a particular timeframe. The highest (strongest) score is +14 and the lowest (weakest) score is -14. There are 8 major currencies in total and each currency is compared against the other 7 currencies. Scores are added for a currency/timeframe if it is stronger than another currency and subtracted when vice versa.
NOTE:
FX Currency Strength Radar is NOT an indicator giving signals to buy and sell. It is only intended to help you identify strength and weakness in currencies and shorten your trading analysis process. You should base your entries using other methods such as price breakout or retracement.
So what if a currency is strong or weak?
1. Pairing the strongest and weakest currencies
Buying strength and selling weakness is an age old adage in trading. If we know that a currency is strong against a basket of other currencies, we know that overall market sentiment is towards that currency is strong and people are buying it.
Assume the following scenario:
Weakest: CHF, JPY, NZD, USD, CAD, AUD, GBP, EUR : Strongest
If you are a trend follower, you will be looking to buy EUR against the weakest currency, CHF. You should be long EURCHF.
You will not want to long EUR with another strong currency GBP as the relative difference in value between the 2 currencies is small and the probability of this trade is lower. Even if it turns out that EURGBP rises, the profit margin will most likely be small.
2. Trading Range Bound currencies
Currencies in the middle of the ranking list are usually drifting along with no clear direction at the moment. They are best for range trading strategies. In this case, we will long USDCAD (4th and 5th of the ranking list) if it is near support and sell USDCAD if it is nearing resistance.
3. Confirmation with other technical analysis methods
When used in tandem with other technical analysis methods or signal indicators, the signals generated are more powerful and have a much higher probability of success!
E.g. when EURUSD is rising, should we long it? If your other signals indicate a long entry and EUR is strong while USD is weak in the ranking, this is a very high probability trade.
However if EUR and USD are close in ranking, it will be better to forgo the trade.
- What is FX Currency Strength Radar?
- How to use FX Currency Strength Radar?
- How is Currency Strength determined?
- FX Currency Strength Radar Manual
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FX CURRENCY STRENGTH RADAR
$69.99
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