The Currency Score analysis is one of the parameters used for the Ranking and Rating list which was published already this weekend. Besides this chart I also provide my weekly analysis on my strategy and the Forex ranking and rating list which is available 3 times a week on this blog.
The favorite pairs in the Top 10 of this list are being analyzed in more detail here. This article will provide my analysis and the FxTaTrader Currency Score chart which is my view 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 The calculation of the Currency Score difference will not be published. Please check the article Forex Currency Score Wk 50 of 2014 and the previous ones for the examples.
- The classification of the currencies from a longer term perspective are provided at the bottom of this article for reference purposes. These have been updated this weekend.
- There are a lot of changes this week as can be seen in the screenshot.
- The NZD, USD and the AUD are currently the stronger currencies. The EUR, CHF and CAD are the weaker currencies. The best pairs to look at are combinations of those currencies.
- Currencies with a score of 4 and 5, these are this week the JPY and the GBP are difficult to trade because they are in the middle of the range. Being in the middle of the range means the currency has no clear direction when looking at the whole market and it can easily go in any direction at any time. It is better to have a currency with some momentum in a certain direction because it is then clear how to trade this currency.
- Conclusion for going long is that for the coming week it seems best to go long with the NZD, USD and the AUD. However, the AUD is a weaker currency from a longer term perspective so it does not have the preference unless the currency score difference is significant ( >3) and it is traded against another weaker currency.
- For the weaker currencies the conclusion is that for the coming week it seems best to go short with the EUR, CHF and CAD. However, the CAD is an average performer from a longer term perspective so it does not have the preference unless it is traded against a stronger currency or if the currency score difference is significant ( >3) and it is traded against another average performing currency.
The fact that e.g. the JPY and the GBP are in the middle of the range is something to keep in mind. Also, some currencies have a different classification from a longer term perspective which differs from the currency score of the week and this is something to keep in mind too.
There are some rules for taking positions according to the FxTaTrader Hybrid Grid Strategy. The strategy can open multiple positions of a currency pair but each currency may only be present once in the pairs chosen for trading. It means that not all the possible positions for this coming week can be opened.
Another rule is that a pair outside the Bollinger Band in the weekly chart is considered overbought/oversold. No positions are taken for these pairs until they are no more overbought/oversold.
Depending on the opportunities that may come up the decision to trade a currency may become more obvious at that moment.
Last week (pending) orders were placed for the EUR/NZD and the AUD/USD with some opened and others still pending. More details on the traded pairs will be provided in my strategy article that will be published also this weekend. The possible positions for coming week for the strategy will then also be described.
Last 3 months currency classification
All preferred combinations comply to the guide lines which define what type of currency, strong/average/weak, can be traded against the other. These are classifications from a longer term perspective where 3 months is being used as a reference. The currencies are classified for the coming week as follows:
- Strong: USD / NZD / GBP
- Average: CHF /CAD
- Weak: EUR / JPY / AUD
This time I added the stronger and weaker currencies. There has been some changes during the last weeks. The CHF has become an average currency and the NZD a stronger currency. The possible changes for the coming period are for the CHF again which can become a weaker currency and another change can be the AUD which can become an average currency.
The FxTaTrader Monthly Forex ranking and rating list is meaningful data for my FxTaTrader Monthly strategy. Besides this list I also use the Monthly Currency Score which is available once a month on this blog also together with my monthly analysis on my Strategy.
DISCLAIMER: 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.