FX Weekly Currency Score Wk13 / Sun. 22-Mar-2015

The Currency Score analysis is one of the parameters used for the Ranking and Rating list which was published earlier this weekend. Besides this analysis and the corresponding chart I also provide the weekly analysis on my strategy and the Forex ranking and rating list which is available 3 times a week on this blog.

It is recommended to read the page Currency score explained and Models in practice for a better understanding of the article. This article will provide 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 are the 2 screenshots in this article showing the Currency Score and the Currency Score Difference.


[B]Last 3 months currency classification
[/B]

The last 3 months currency classification from a longer term perspective are provided for reference purposes. The necessary charts can be found in the previous article Weekly Currency Score Wk11. The currencies are classified for the coming weeks as follows:

[ul]
[li]Strong: USD / NZD / GBP. The preferred range is from 6 to 8.[/li][li]Average: CAD / CHF / JPY. The preferred range is from 3 to 5.[/li][li]Weak: EUR / AUD. The preferred range is from 1 to 2.[/li][/ul]


[B]Currency Score[/B]

For analyzing the best pairs to trade this classification is the first issue. When looking at the most recent score that is used for the coming period we can see in the screenshot below that the CHF is having a score of 6 and the GBP a score of 2. A strong currency should have by preference a score of 6 or higher and an average currency a score of 3 to 5. The CHF is getting stronger lately and switched places with the GBP last week. However, the score of the GBP is only 2 and this means that the AUD which is a weaker currency also switched places with the GBP making the GBP moving to the range of the weaker currencies.

The conclusion is:

[ul]
[li]Most of the currencies are at the right level except for the CHF which is a point higher, the GBP is 4 points lower and the AUD is a point higher.[/li][li]There is a strong pullback at the moment for the GBP when looking at the market as a whole.[/li][li]There is a light pullback at the moment for the AUD when looking at the market as a whole.[/li][li]There is some increase of momentum for the CHF which is getting stronger.[/li][li]The pairs that we may look at are all most probably trending except for the pairs with the GBP and AUD which are most probably ranging.[/li][/ul]


[B]Currency Score difference[/B]

According to the Ranking and Rating list already published this weekend the following pair combinations look interesting.

[ul]
[li]EUR/NZD with the GBP/CHF[/li][li]EUR/CHF with the GBP/NZD[/li][/ul]
When looking at the Currency Score Table here below for this week we can see the currency score differences. The interesting pairs should have by preference a score difference of 4 or higher when they are similarly classified. Or the better classified pair should have a higher score than the counterpart. All the pairs mentioned above comply for trading in the coming week. The Currencies are colored Green, Orange and Red resp. by the classification they have. This way it is easier to see what currencies should have a certain score difference.


The technical analysis is the most important issue to consider before taking positions. The Weekly Chart is being analyzed. I prefer the Bollinger Band for defining where a pair is in the chart. Once a pair is outside a Bollinger Band it is in a strong trend which can cause a strong pullback. Although this may be a good opportunity for other analysts I avoid taking positions because of the possible unexpected strong pullback. Positions are only opened inside the Bollinger Band and this may be at the start of a possible trend or on a good pullback in an existing trend.

[ul]
[li]The EUR/NZD is clearly in a downtrend and at the Bollinger Band.[/li][li]The EUR/CHF is getting weaker, although the downtrend cen be better seen in the daily chart, and it is inside the Bollinger Band.[/li][li]The GBP/CHF is also getting weaker, although the downtrend cen be better seen in the daily chart, and it is inside the Bollinger Band.[/li][li]The GBP/NZD is clearly in a downtrend and nicely within the Bollinger Band.[/li][/ul]
So all the pairs mentioned here are interesting for the coming week except for the EUR/CHF and GBP/CHF which do not look that convincing. Last week (pending) orders were placed for the EUR/NZD which remains interesting for the coming week. More details on the (possible) traded pairs will be provided in my strategy article that will also be published this weekend. The possible positions for coming week for the strategy will then also be described.

When trading according to the FxTaTrader Strategy some rules are in place. For more information see the page on my blog FxTaTrader Strategy. Depending on the opportunities that may come up the decision to trade a currency may become more obvious at that moment.


[B]DISCLAIMER: [/B]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 recommendation to purchase any financial instruments. The choice and risk is always yours. Thank you.