Complete Currency Dynamics

[MikeWolski]

This thread will be a diagnosis of how each of the 8 currencies are relating to each other.
I know everyone has their own take on how they view the market. Whether you predominantly follow indicators, a specific pair, or just look out for a particular pattern to show itself, there are some things that take place in the market that are undeniable. And that’s what I plan on exploiting in here.

First off, this is where I am coming from. I like to see the market from big to small. Basically, I want to know what’s going on. Of course, you can know what’s going on even from different perspectives. Invariably, I have set some of my own fundamental boundaries, given the time frame span that I trade. Which would probably be between an intraday trader to a swing trader. It all depends on what’s going on.

But anyway, this thread is not going to be a signal service, or anything like that. I won’t even be announcing any of my trades. I want this thread to speak about what is going on in the market. This will all be purely objective. But… given these constraints.

- Monthly view-
There is a beginning and an ending. My view is this. I always find that change seems to take place around a turn of the month. Therefore, I find it best to keep track of the currencies on a monthly basis. And when you do that month after month, it will all be evident, of what’s going on.

-Running Totals-
I believe this is the best way to get as much information as possible out of all 8 currencies. I want to see how they are relating to each other, in the context of the month.

-Strong/Weak-
Let me first say, that this is in no way a substitute to that awesome thread Dennis runs. He comes from a different perspective than I do, that’s all. I love his thread and always check in from time to time. And what I will do is compare his stats to mine. But, there’s one thing that we both agree upon and that is… there is no better way to judge how the currencies’ are relating to each other than strong to weak. And that’s not even to say that stronger is better than weak, cause if you were a central banker (economically speaking anyway) you would want a weaker currency, especially in regards to your trade stats. Needless to say, all strong/weak is telling you is what’s been the trend. Which way is it going? And for how long? That’s all.

-% 's-
I’m old school. I want to know specifics, and exact numbers. I don’t know any other way to know how one currency is doing against another unless it’s expressed in a percentage. Surely not in pips. It’s the one thing they all have in common with each other. You will see a lot of percentages around, but, all that will mean is how much stronger or weaker they are. But don’t worry, I will be doing more simple explanations than just screen shots. Cause what’s most important is what all this data means, in simple terms.

-Complete Currencies-
As in the title of this thread, and the most important aspect to me, I want to know the condition of the entire currency. As it relates to every other currency, in total.
See, I used to think that all you have to do is look at which candle is the largest, between the 28 pairs, and you would find the strongest and invariably the weakest currencies. Well guess what? That’s not true. I have found instances of when it doesn’t line up like that.
And it makes sense. The only real way to find out who’s the strongest is simply to add up each of the 28 pairs %'s, against each other.
I wrote this down in my notes, because it was a real revelation. There’s a difference between the strongest and weakest pair…from the strongest and weakest currency.
If you think about that for a minute, it’s revealing. What I want to know is how the currency is fairing across the board. It’s kind of like I want to know what the consensus is from those who move the market. I just want to know. Money flowing into…well money!

Look. I know most traders trade a single pair, or two. I trade complete currencies. That’s why this is two fold bit of information. I only trade the strongest currency against the weakest currency. It’s a basket of trades that I do. 13 pairs (strongest against the other 7, and the weakest against the other 7…one is doubled).

Everyone will trade their own way, and this is not going to be a thread on how to trade these. What this will do is show you how the currencies progress throughout the month, how they will relate to each other, watching the trends, and seeing the changes occurring. We can talk about it. Throw in opinions. But, I will be most concerned with what the facts are, and we need to remember to be most objective about what’s taking place. Let me put it this way…whatever happens in the market, I will know about it. Maybe we can even correlate the fundamental drivers that make up the trends that take place (I’m one that pays attention to that stuff).

- Daily time frames.
I do have end of day only stats. I still fundamentally believe that the most accurate tell of a flow comes from end-of-day numbers. I never want to forget that. But…

-By sessions.
I want to know what happens inside of a day. And, everyone should know by now, that you have to be aware of the three sessions that transpire within a day. So, you want to know what happened during the Asian session? I’ll be able to tell you.
I guess I should share when I divide up the sessions.
-5pm -This the end of the day. (I’m in the U.S.) Right now, that’ll be 11pm GMT. Or Zurich time.
-3am - This is 8 am London time. 9am GMT. London session start.
-8am - This is U.S. start. 1pm London time. 2pm GMT.

So, there are 3 times a day that I run these numbers. Basically I will be able to know what happened during each session. There’s nothing I can do about the overlap between London and the U.S. I will just know what London does during their morning time.

Ok. Well, this is a good start. I tried to give you as much information about this thread as possible. A lot more will follow. I will be spending a lot of time making these numbers all make sense to you.

Remember, it’s not so much about the numbers themselves. It’s what they mean. It’s putting them all into context. All we want to know is “what’s going on?”

Bear with me. I’ll get much more out there as we go along. I do want to give a heads up on how this month is playing out so far. We’re entering into the second week. So, I have some catch up to do here.

Mike

[MikeWolski]

Ok. Let’s start of with a few questions.
These are what I’m aiming to answer.

Who’s the strongest currency for the month?
Who’s the weakest currency for the month?
What’s the length of time they’ve been there?
What kind of change is happening, in any?
How are they all relating to one another?
How are the Comms relating to the Majors?
How’s the Dollar relating to all of the others?
What happened during the last session?
How does this fit in with the “Daily Flow”?

So, we will have the big picture analysis. Which will be the “Daily Flow”. And we will have the chance to see where the change took place, like what session. So, let me do some explaining along with the tables.

First off, this is the corresponding colors to which currency.

This is why I went with these colors. The Comms will be closely related around the reddish color. They should be easier to distinguish than the others. The USD is white. Not related to any other. EUR is yellow, along with CHF (pink) their counterpart. Sort of close to each other. GBP is blue, in a class of it’s own. JPY is purple. An outlier, I think.

Well, this is how the month of December went so far. First full week. And we’re actually coming up on the end of the second day of this second week (so I will have to run here in a little bit).

And now let’s zoom in by sessions. This is how the month progressed by sessions so far.

I know this probably doesn’t look all that appealing, that’s why I do want to some explaining as we go along. But, I’m actually running out of time for today. Oh, there’s a whole lot more.

But, when you see all those %'s…all it’s saying is what the running total is for the month. Remember, there’s a beginning and an ending. So, for instance, look at the AUD, first session of the month. They were up 4.01% against everyone. Then at lunch time for London, they ended up a little higher, to be at 4.64% for the month. Then, when that day ended, they ended up only being 3.14% higher against everyone, for the day. See, you can see the progression, as it happens.

If you really pay attention, a lot takes place inside of a day. And I guess you could always just pay attention to the end of day figures.

I will have to really get you up to speed about what happened during the month of November. For now, just know that the NZD, and the AUD, were the strongest currencies for the entire month. But, don’t look now, but things are changing. And you can see that with your very own eyes. I’ll give you a clue. It started on Wed, Dec. 5th. Well, both those currencies nose dived mid week.

It figures, but, I know today they took some pips (%'s) back. Don’t worry, I’ll be showing you the results.

I know I have much catching up to do here. I just figured I will clue you in on some of this stuff.

Ok. Got to run.

Number time.

Mike

[MikeWolski]

Ok. Let’s get the latest. (Mind you, I still want to get caught up with what the market has been doing. Will get to that tomorrow).

I will show you what NFP looked like, to the present.

Ok, lot’s to explain. Let me take it from the latest, and I’ll work my way backwards.
-Today.
The strongest currency for the day belonged to the AUD. They were up 2.24%.
The weakest currency was the GBP. Were down 3.62%. (That’s bottom most right 2 boxes.
Now, those boxes just above them show me which currencies were the strongest and weakest for that session.
Well, believe it or not, the Pound was the strongest during their morning session, more than any of the others. But look out by the end of the trading day, the got pummeled. And we all know why, right? So, that is what did it for them for the entire day.
So, we also need to note that for the month, the strongest currency, right now, is the CHF. Closely followed by the EUR.
The weakest right now belongs to the GBP. But, you know, it was the AUD that trailed for most of the month. Just look at by how much.
I got to tell you…today was a real turn around. Well, at least a real good retracement anyway.

If you want to know what those black numbers mean, it’s this. See, I want to know what kind of flow took place during the session. This is what I do. I split up the group into 2 parts. Those who are running a positive percentage, and those who are running negative. Well, from the very last session, if they are in the positive, then they should go more positive, right? And if they are in the negative, then they should go more negative. Like, that is what I think going with the flow means. If they go against the grain, then it would be a negative result. And all that bottom black number is what the total positives and negatives added up. The greater a positive result would be, the more of a flow it would have been. For instance, the US session turned out to be quite positive flow. There was 5 currencies that were positive and 3 that were negative. So, how much they all went with their respective flow will be reflected in that bottom black number (black background with white number).
So, we see that the USD really took off higher. Along with the JPY. And along with the NZD. The GBP really helped with the flow because they shot on down in the direction they were poised on (negative).

Anyway, I don’t have much more time here.
Will divulge in this much more tomorrow.
Have all day for it.

Mike

[ria_rose]

This looks super interesting @MikeWolski! This will definitely be an addition to the threads I constantly check before putting any trades. Haha. (I follow the HLHB system but I also try to see what other traders have to say about each currency. :))

[MikeWolski]

Don’t have much time here now, but, this is the latest.
Will talk about this in a few hours.

NZD is the weakest currency through Asia.
Interesting.

Mike

[MikeWolski]

I have a few minutes.

So, you know, I don’t even look at charts anymore. Honestly, only about 5-10% of anytime I want to know what’s going on in the market. I’ll show you what I look at.

What’s going on now?

Well, it’s about 5am now. The GBP is the strongest.

So, who’s the weakest.
Well, according to that table, the NZD looks to be. Well, I’ll switch over to them.

And so, if I want to see the entire crew, this is how it looks. But, won’t be able to get it all on one screen. You’ll get the picture.

I didn’t match those 2 screen shots up. You should understand.
The point here is that I can see the strength of the field.

I’ll get around to explaining the percentages. Believe me, I needed to know what’s strong, real strong, simple back and forth…etc.

There’s so much information around, it’s quite amazing. And I plan on explaining all that I know. Stay tuned.

Mike

[MikeWolski]

I’m going to start putting things into perspective. And a good place to start will be seeing how November ended. Also, I find this extremely interesting. I learned something about month’s end flows.

• NZD, AUD was pretty much the only currencies that ran positive throughout the entire month.
• JPY, CAD were weakest all month.

So, think of end of month. Follow my train of thought. Normally, the consensus is there very well might be some profit taking and some kind of reverse to what the flow has been, come end of the month. Look…I’m waiting and watching. Monday…goes to the USD (strongest), and the JPY weakest. Summary, no real change. Tuesday…NZD took the day. Still no change. Wednesday…NZD still! They took 2 days in a row. That’s uncommon, cause I usually don’t see that. There’s always a back and forth. Ok. Well, how about Thursday. Well, the JPY took the Asian session. Alright, here we go. Getting somewhere. The EUR jumps a bit to take the day at the end. Friday comes…now just look at what happened. Dog-gone NZD. They take Asia, London, AND US sessions! That just does not happen. No currency takes all 3 sessions. I mean, it doesn’t. That’s why this is all the complete opposite affect.

Well, I learned something. Maybe it’s all or nothing. Either there will be a change, or it goes headlong stronger. Something I will remember.

So, bottom line is, no change. Man…I thought the CAD had it in them. Just look that Thursday. They took the London session and gained some more through US. But, petered out the last day. All the attention went to both NZD and the AUD.

And that leads us into December.

Well, I got to run the numbers here at 8am. US starting, and overlapping for London. Be back with the results. Then I’ll continue.

Mike

[MikeWolski]

Let’s talk about the present. Fresh data just in.

Well, the GBP took over that session. BTW…that 5.02 figure is the percentage higher than where they were sitting last session. They came up 5.02 %. The NZD dropped 2.3% since London started, the weakest currency. And that leaves us with the NZD dropping like a knife this whole day so far. Now, according to history, as you can see for yourselves, it’s always a back and forth. And if it isn’t, then that tells you that the trend is strong.

There is a selling going on with the NZD today. See?

Now, the bottom shows you this. It’s the total running % of the strongest currency against the weakest currency, for the month. As of right now, the strongest and weakest currencies are the EUR and AUD. The way I derive that is by adding up their spread. It’s just like what Dennis does on his data. Look…EUR is sitting at 9.14%. The AUD is sitting at -10.20%. Well, the spread difference between them two is 19.34%. Got it? Basically, that tells you that that’s the greatest spread between every currency match up. Which The next biggest difference of a match up is the AUD to the CHF, at 16.08%.

So, it’s kind of like knowing which match ups are the most polarized. Strongest to the Weakest…in order. I’ll explain more about that little later. I can show you how November panned out.

It’s all about knowing which currencies are currently the strongest and weakest, as the month is progressing along. And then, if you want, you can go to their chart and diagnose further. In my case, I would trade them as whole. Needless to say, it’s information I deem important.

Remember, there’s different ways to trade these currencies. Just remember to keep the time frame in perspective. Another value to all this information is the fact that things always change. We don’t know exactly when they will, but, at least we can see when it does. Right?

I just am showing you what happens on a session by session basis. Also on a daily basis.

Be back soon.
Mike

P.S. - In case you were wondering, those blackened EUR/AUD squares on the bottom, was what I was trading. That was the indicator that told me when I got in with them. As you can see, was going pretty well for a while, but then recently things changed (yesterday), and I jumped. Lost too much for my blood.
Dog-gone it…maybe I should get back in…
Thinking about it.

[MikeWolski]

I’m going to shed some light on exactly how much a currency pair travels in a day. It would be like getting an idea of a daily range. % wise. Now, don’t get all freaked out with the table. Follow with me, I’ll explain what’s important. Will show October and November’s monthly daily data.

I shortened the table to show you what pairs they are on the left. And on the right is the totals, for the month. On the top is the USD. Look, top right corner. EUR/USD top. Daily total for that pair. The range went from -.69 % to .62%. And the average daily total was a -.11%. Self explanatory. So, ok, we have some idea of what that pair can travel, in a days time. Now, look at the USD total. That’s the total of how they did in a day. Aggregate wise. So, when all totaled up, on how they did for a daily total, they went as low as -3.43% up to 5.23%. That was their daily range, for October.

You can see that pretty much across the board that a currency will travel anywhere between 3-5% positive or negative. And their averages end up somewhere around 0.

Now, look at bottom right. Divide that into two boxes (top half and bottom half, separated by the green). The top half is a single pair. The bottom half is the total currency. So, the currency pair (top) that went most negative was the CAD/JPY. -1.51% (favoring the Yen) . Happened on the 10th. The currency pair that went most positive was the AUD/JPY 1.37% the second to the last day of the month. Basically, that’s the complete range out of all of the pairs.

And the total daily travel a currency had that month. The CAD went -6.75% in one day. The AUD went 6.20% one day. So, that’s the range that happened that month.

How about the stats for November.

Bit of a difference since previous month. The single pair range went from -2.14% to 2.11%. A bit more.
Now, the complete currency daily % went much further. -12.84% to 8.68%. Much greater than last month. Huh?
Look. Over time, I’ll collect more and more data to find more precise averages.
All I know is, a pair usually is pretty strong when it gets around 1%, in a day. As for the complete currency, around 5%-6% a day is pretty strong. That’s on average.
We all know anything can happen. But it’s good to have some kind of idea in your head, you know?
If you’re really interested, I can show what the running totals are for the current month running. It’s posted at the end of my table.

Alright.
Sorry for the data blitz.
I live on this stuff.

Mike

[tommor]

No need to apologise for data Mike, its what we should all know about our chosen field but sadly its very difficult and laborious to get hold of or generate.

Credit to you and Dennis and some notable few others for trying to lift our knowledge and perspective a little but higher than, “This is a hammer, this is a head-and-shoulders…”.

[MikeWolski]

Wow.
Thanks Tommor!
I have to say I’m so very happy you’re here!
You get all my respect for the work you do in here.
I know you’re smart.
And…old.
Which I highly respect!!!

Thanks!

[MikeWolski]

Well, one more thing.
Man…I absolutely love Barchart. So much information available.
How about the forex heat map. Gives a good picture. This is the present status.

Now, if I were to go in with the EUR/AUD right now, it wouldn’t be so smart. Remember, I want the strongest to weakest. They are only separated by a little bit. This is present time. I would get killed, cause the AUD has some strength.

Anyway…today goes to the GBP/NZD pair.

Unbelievable.

Mike

[jafooly]

This is some good stuff right there. I love me a good heatmap.

[justshell]

is this the same as @Dennis3450 S/W rankings? or this is something different

[MikeWolski]

Hey Justshell.
Well, let’s just call it a diagnosis of the currencies. Sure, it’s strong and weak also. But in a different context, from Dennis’. Basically I’m seeing who’s strong and who’s weak from the beginning of the month to the end.

That’s all.

Stay tuned.

Mike

[MikeWolski]

I just wanted to give a heads up on something.
I’m not all that new to the whole running of the numbers, strong/weak diagnosis thing. This is how I started out, in 2013. But, '14 - '16 were my strongest years of data collecting. And given that I was old school, I kept it all on paper work (nothing like the good 'ol paper and pencil). Then I transitioned to excel (maybe in '16). But, can’t, and will not, get rid of my old work. So, I took some pictures of some of the stuff that I’ve done back then. Take a look.

Sorry you have to tilt your head. But I’m not cleaning all that up again.
This was my life…and still is.
Man…what memories. All that was very special to me. I did most of all that work in the dark. Before anyone ever woke up. I even remember past Christmas’ when all I had was the light from the tree shining.
Very.
Very.
Special memories.

Be back with the ending stats little later on.

Mike

[MikeWolski]

Here’s what the day looked like in total.

• Bottom right, no surprise. GBP took the day being up 6.77%.
• NZD down 3.89%.

-The Pound took both sessions.

• The Dollar was the weakest currency during the U.S. session.
• The EUR is pretty far ahead of the whole pack, for the month, with 9.22%.
• The AUD is back on bottom, for the month, with -10.58%.

Notable - The US dollar sinking. And that comes after a pretty big last US session boost.

• The CHF is not following the EUR as closely. Look. Bit of a separation today. shrug

Interesting.

If any one else sees anything interesting, please share.

Mike

[tommor]

Today, the strong currencies fell, and the weak currencies rose, all in step. This internal correlation is as I see it matched by the external correlations with Dennis’s and Snowman’s likewise mathematical conclusions, so surely confirms your analysis is good.

Happy to say my own conclusions are right in line with yourselves, though I look at major pairs’ direction compared with 50EMA slope direction, though I only do this weekly (lazy).

[MikeWolski]

What happened overnight… (Asia)

-AUD strongest.
-NZD pretty close second.
-CAD pretty weak.
-USD weak. Actually, both of them were traveling in lock and step.
-EUR/AUD is still the pair on top.
-The positives are dwindling. The Yen dropped out. The USD close behind.

Definitely risk on going on.
Will be interesting what happens today, regarding the EUR.

And thanks Tommor.

Mike

[MikeWolski]

Here’s the latest.

GBP strongest for the session.
AUD weakest for the session.

As we can see, there’s always changes happening. You just have to keep the perspectives. For the month, the EUR is strongest, AUD the weakest. And see, we can see by how much. Plus, I do think the 0.0% mid line, which separates the positives from the negatives is telling. We will see that not changing as much, as other things.

For the strong - weak perspective, I believe that should be considered.
Also, if you pay attention to the colors, in how they are all relating to one another, there is some semblance, …pattern.