Trading the Trend with Strong Weak Analysis

For those of you using MT5:

I created an indicator that shows a 2% envelope around the 200SMA.

Why we care
Typically, Dennis’ numbers are considered a valid move when the prices difference between two currencies is > 2.0%. This indicator, when run on H4, on the top choice from Dennis’s SW picks, will show where prices are relative to this 2.0% demarcation.

What else?
Since I only really care about prices beyond the 2.0% envelopes, I darkened the prices inside the 2% envelopes.

What does it look like?

ShadedEnvelope.ex5 (30.2 KB)

Is there a version for MT4?
No, I don’t use MT4.

Note
You may need to adjust the colors to suit the candlestick colors that you use. I recommend you build a template.

Enjoy.

6 Likes

Pretty amazing how the big blue 1hr candle stopped right at the 200 ma, if you were a gambling man and went short at the close of that blue candle you would be up 40 pips now and could stay in with a breakeven stop, It is still a coin toss if we go up or down from here, but that daily candle is saying the down move is over for now

1a

My NZD/JPY break-even stop was taken out exactly at the 200 SMA lol.
But managed to close half position when it is in profit at 1 ATR, just 66 pips.

1 Like

I did exactly that, except I took 45 pips and got out.

That’s my thinking—I feel the tendency for a ranging market for the next day or two. There are plenty of symbols abiding by the 2% rule, but most of these have prices hovering around the H1’s SMA200.

I’m going to wait and see.

1 Like

One thought: if you are using H1’s 200SMA for a SL, put it a fixed distance away from that SMA to account for noise.

fantastic, now that is how to day trade

Ohh, I entered that when it appears as the top SW trade few days ago, at around 68.45.
So I had taken half profit already and just let the trade running risk-free.

1 Like

I followed the top SW trade at 7 Aug.

It moved well immediately for 3 days. So I decided to close half since it reached ATR(20) and let it run risk-free.

But it seems that JPY strength still in place according to today’s performance, looking for second chance to get back in.

What was down yesterday is up today and vice-versa

That GBPJPY trade off the 200 ma on 1hr chart was up 100 pips earlier today

1

Hi Dennis,

Love your work; I’ve read through both threads from start to finish and think I have a pretty good grasp on how to use this method.

I do have a couple of questions:

  1. How do you avoid pull-backs when a currency goes very strong or very weak?
  2. How much weighting do you give to day-to-day change of a particular currency? i.e. the currency might not be the strongest but is increasing in strength more than any other currency

For all the cTrader users I have created a free Strength vs Weak Analysis indicator that uses the same calculation used in this thread. I have compared it to historical posts in this thread and it appears to align.

I can’t link directly but it is indicator 1990 on the cTrader site.

1 Like

Thanks for your contrubution dunder…What are these 5 steps you have placed on the top left corner for?

Work for MT4?

Back and forth action continues, if the pattern continues tomorrow should be an up day for Yen

1

That’s just there as a reminder for me, feel free to ignore

Hi Tigranes, is this indicator simply like a SMA attatched to a chart, not a seperate chart? So I could simply add this to the templates I use together with the other indicator’s. Also is the 2% a selectable variable or is it fixed in the coding? Thanks for the contribution.

Works on main chart.

This is an input you can change if you so desire.

That’s exactly what I did. I have 1 template I use that has this and a few other SMA’s of interest.

Here is a bare-bones template that shows this indicator with the exact candle colors that I use.

ShadedEnvelopes.tpl (4.0 KB)

Pullback or consolidation, in any case, our trends have taken a breather, no better example than Top Trade NZDJPY* , looking at the 1hr chart, the price has just been moving sideways just below the 200 ma

1

1a

1 Like

Strong day for stocks but not much reaction from currencies, we are still in a holding pattern

1

2 Likes

Someone wake me up when this market starts moving

1

3 Likes

It is risky to trade GBP pairs at this time? Yesterday GBP surged up despite it being no. 6 on SW chart, just due to “news”.