Strong/Weak Currency Analysis

Trading Discussion Currencies
1

Hello BP Community

I have created an Excel sheet to analyse strenght of eight major currencies (Strong Vs. Weak). While I was testing the results of my Analysis sheet, I had also posted few Analysis along with the Trades’ results to My Trading Journal.

Now, I want to share it with the BP community after testing it by myself. I would be pleased if you could check it and test it by yourself. I would be glad to hear your views or feedback about the result or accuracy of my XL sheet.

Here is the snapshot of it for your review:

SW ANALYSIS.PNG910×305 13.6 KB

Here are Major and Cross currency possible PAIRING on the basis of above SW Currency Analysis:

pairing.PNG809×380 7.65 KB

@alphahavoc

And here are the rules to pairing the two currencies:

RULES.PNG623×733 26.1 KB

From the above SW Currency Analysis sheet, following Base currencies can be paired with Quote currencies:

1- NZD (100% Negative, Weak) + CAD (100% Positive, Strong) = BEARISH TREND

NZDCAD.PNG1410×872 100 KB

2- CAD (100% Positive, Strong) + JPY (14% Negative, Weak) = START OF BULLISH TREND

CADJPY.PNG1415×867 97 KB

3- AUD (71% Positive, Strong) + NZD (100% Negative, Weak) = CORRECTION / REVERSAL

AUDNZD.PNG1417×877 86.1 KB

4- GBP (14% Negative, Weak) + CAD (100 Positive, Strong) =BEARISH TREND

GBPCAD.PNG1419×863 103 KB

5- GBP (14% Negative, Weak) + USD (71% Positive, Strong) = RANGE BOUND MOVEMENT

GBPYUSD.PNG1408×862 86.5 KB

I would appreciate to receive your suggestion, if any, for further improvement of my SW Analysis sheet.

EDIT: Please note that it is not a Trading System nor any Signal Services rather it is purely a method to analyse the strength of (Strong Vs Weak) currencies.

2

What is the percentage based on? Moving Average is my guess

I doubt there is anything new here given the extraordinary amount of CSM available but free and paid

But good luck

3

Here are some of my suggestion,

  1. You may want to make your percentages more precise, like using net diff in pips rather than percentages. Then compare different days of net change in pips gain/loss. You get an acceleration or deceleration variable. Meaning you get to feel if the momentum is strengthening or weakening.

  2. You may want to do the same for weekly charts and compare them with your daily charts. Make sure both aligns before taking any trades.

  3. Diversification of trades, maybe take on 5 trades simultaneously, and targeting each trade for a profit/loss of 12% to 25% of Average daily range. Very unlikely you will get all 5 trades incorrect isn’t it. Instead of aiming one pair for a 50% average daily range profit.

  4. I’m not really sure if your interpretation of range bound movement is correct. To counter trend with these pairs might be risky. I rather you counter the strongest/weakest pair or follow the direction of SW pair.

Last but not least, i have yet to receive your PM about your table construct of ranking and percentages. Any further explicit input from me will require your SW chart Blueprint. You are probably on the right track. Now is just a question of money management habit.

4

Apologies if I’m missing something but I don’t understand how your percentages are calculated. 100% of WHAT? 71% of WHAT?

When I started looking at strengths/weaknesses of forex currencies a while back, the first idea I tried was to designate the strongest currencies those with the greatest % price rise. But a 1% average weekly price rise on say USD over 3mths might be a record-breaking performance, whereas a 1% average weekly price rise on AUD over the same period might be its worst ever score.

How does your system overcome this inherent unknown?

5

Thanks everyone for your valueable comments/feedback. I will try to answer your questions and will provide details of the calclation of percentage.

First of all, I would like to add that I normally do either Day trading or Swing Trading. So, my primary objective is to catch a short term upward or downward movement whether it is a Bullish or Bearish trend or the counter trend.

I use 4H TF as my Primary chart but I also take notes of Daily TF. I always align my 4H TF with Daily TF setup before taking any Long/Short position.

For examply if the 4H TF showing a Bullish Trend and Daily TF is also confirming an Upward Movement then I would take a Long Position. However, I would use the 1H / 15M TF for taking an Entry of Long position in line with the 4H as well as Daily TF to get better price entry.

You may say that it is based on moving average but it’s not dependant on values of MA.

I didn’t use net difference of pips for calculating the percentage.

The method of my calculation is very simple.

The purpose of creating the SW Analysis sheet is to judge that which currency the professionals are buying or selling. Or, in other words, we can say where the smart money is being placed / traded?

Since I want to trade on short term basis that’s why I select Daily chart for my calculation. So I created an XL sheet to input the values of eight currencies along with their crosses in it as follows:

image.png1149×453 9.25 KB

1- I use the 5 and 10 period EMAs to confirm an upward or downward trend.

2- If the price is trading above the EMAs then I consider it Bullish and input it’s value as “1”,

3- If the price is trading below the EMAs then I consider it Bearish and input it’s value as “-1”,

4- Else the price is Flat/Rangebound the I input it’s value as “0”.

5- Then I sum up these values and divide it with “7” and convert it in to percentage.

That’s all. I do this exercise on daily basis at 7 to 8 AM GMT.

As I have explained above that I only trade on short term basis, so I don’t think it would be helpful to compare it with weekly chart. However, if you want to trade medium to long term basis then you may amend it as per your requirement.

As I have already mentioned in my Trading rules that there is so much weightage is given to %age value in SW Analysis.

So, to check a Counter Trend, you should experiment it. However, a simple rule is "If the %age value of Base Currency is smaller than 50% and the %age of Quote currency is grater than 50%, then there are more chances of Counter Trend.

For Example:

EUR / AUD and EUR / CAD

GBP / AUD and GBP / CAD

I think you didn’t check it.

I am sure that if both the Base and Quote currencies are either Strong or Weak, then there is more chances of Rangebound / Flat movement.

I hope I would have clearly explained the calculation and rules for trading my SW Currency Analysis method. I am sure that I have replied to all of your questions too.

As @FX_Johnny mentioned that there is nothing new in my method and there are much better methods available either Free or Paid on the Internet… That’s why I never assume that my method is 100% correct. But I just tried to build it for myself and it is still in testing mode.

Thanks again everyone

Sufshiken

1 Like
6

Just don’t understand why people need to reinvent the wheel, I guess, that’s just me

2018-05-14_20-21-20.png824×346 17.4 KB

1 Like
7

And what do you know, EURJPY is breaking out; what’s on your radar?

2018-05-14_20-26-14.png1214×937 37.5 KB

8

As per my SW Analysis, EURJPY is currently showing a Counter trend. It is yet to be confirmed a breakout or reversal unless the price doesn’t suggest HH HL structure.

EURJPY.PNG1598×746 30.2 KB

9

Don’t understand why people don’t give credit where credit is due. Acknowledge the work of others

https://www.forexfactory.com/showthread.php?p=10870196#post10870196

1 Like
11

Are you insinuating that I am taking “credit” for someone else’s work?

There are 3 indicators there, do I have to give “credit” every time I post a chart?

12

I think if “your chart” is a copy of someone else’s work, then in it’s briefest terms - Yes you do !

1 Like
13

No my friend. Not at all. But as you said, we are not reinventing the wheel. If fact it’s pretty arrogant to suggest any of us can offer something new. So if you going to use someone else’s work (particularly if done as open sourced) as an example then yes you do need to credit them.

What the OP is doing here is not new. But it is a fresh perspective so that we welcome.

14

I don’t think it is, plain and simple. It’s just another ordinary indicator, FREE, for Metatrader 4.

All the information need is right there on the chart as demonstrated by Sherlock Holmes in tracking it down to the “source”

I doubt whether there is even one post giving “credit” to anyone work on this forum

What a clique there is here, see ya

15

nothing new, but why go to that effort and not very accurate anyway?

it’s all out there and much easier

I didn’t offer anything, just a plain FREE indicator on a chart, gee whizz

Nothing hidden, no credit needed

16

Thanks @aRealityCheck for your appreciating remarks.

17

SW Currency Analysis of 17/05/2018

sw analysis 1705.PNG921×309 14.5 KB

Possible currency pairing

1- EUR CAD (Sell)

2- EUR AUD (Sell)

3- NZD CAD (Sell)

4- CAD JPY (Buy)

5- AUD JPY (Buy)

6- AUD NZD (Buy)

Disclaimer:

Please note that no one can predict the future. So, what has been quoted above is just my opinion and not any recommendation of Buy or Sell the proposed currency pairs.

Always take precautions to safeguard your Capital or Profit by utilizing Stoploss and Trailing Stop accordingly to your MM rules. And don’t blindly follow to any buy / sell recommendation.

18

I’ll gladly help in test it out for you , if you provide the SW currency pairs Analysis every morning.
Well done :+1:t4:

19

Thanks Alex for liking the analysis and offering your help.

Edit: You may follow @Dennis3450 Thread Trading the Trend with Strong Weak Analysis.

He provides daily updates of his currency ranking.

20

UPDATE TO MY SW CURRENCY ANALYSIS METHOD:

Since I use Ichimoku Cloud as my primary indicator, so I have made certain changes in the rules of my SW Currency Analysis sheet so as to align my method in accordance with the rules of Ichimoku Cloud as follows:

0- As I use 4H TF being my Primary timeframe, so I have changed Daily TF chart to 4H TF chart for my new Analysis method,

1- To confirm an upward or downward trend, I base on the Ichimoku Cloud/Kumo,

2- If the price is trading above the cloud, I assume the trend as “Bullish” and input it’s value as “1”,

3- If the price is trading below the cloud, I assume the trend as “Bearish” and input it’s value as “-1”,

4- If the price is trading within the cloud, I assume it as “Rangebound/Consolidation” and input it’s value as “0”.

5- Then I sum up these values and divide it by “7” and convert it in to percentage.

That’s all. I do this exercise on daily basis at 7 to 8 AM GMT.

Here is the screenshot of my new analysis sheet:

sw1.PNG965×676 41.1 KB

Meanwhile I am also maintaining another Analysis sheet on the basis of “Price Action” (Closing Price - Kumo value / Closing Price) just to compare the results of my both the Analysis sheets.

Here is the screenshot of it:

sw2.PNG685×709 35.6 KB

You would observe from both the screenshots of my above SW Currency Analysis sheets that these are projecting almost the same results during the last five days.

@tommor @alphahavoc @Alexkhatoun @FX_Johnny @anon28931212 @ria_rose

1 Like
21

@Clint What is your opinion on the above analysis with regard to EUR and AUD?