Trading the Trend with Strong Weak Analysis

[Tigranes]

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.

[Dennis3450]

@Tigranes

I’m noticing that prices are hovering at the 200SMA on H1 for GBPJPY and even more so for NZDJPY. Now, I am not saying there will be a bounce, but I am hopeful.

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

[WinsTrader]

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.

[Tigranes]

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,

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

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

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.

[Tigranes]

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.

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.

[Dennis3450]

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.

fantastic, now that is how to day trade

[WinsTrader]

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.

[WinsTrader]

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.

[Dennis3450]

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

[4x.dunder]

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.

[Constadino]

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

[marrieche2000]

cTrader

Work for MT4?

[Dennis3450]

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

[4x.dunder]

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

[gord0n]

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.

[Tigranes]

@gord0n

is this indicator simply like a SMA attatched to a chart, not a seperate chart?

Works on main chart.

@gord0n

Also is the 2% a selectable variable

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

@gord0n

So I could simply add this to the templates I use together with the other indicator’s.

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)

[Dennis3450]

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

[Dennis3450]

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

[Dennis3450]

Someone wake me up when this market starts moving

[Kellycml]

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”.