Forex Strength And Comparison Week 16
Forex Technical Analyst Trader | Apr 17, 2016 07:00AM ET
Welcome to my "Strength and Comparison" article for the coming week, the article "Ranking, Rating and Score" has also been published.
For analyzing the best pairs to trade looking from a longer term perspective the last 3 months Currency Classification can be used in support.
This was updated on 27 March 2016 and is provided here for reference purposes:
Strong: USD / JPY / CHF. The preferred range is from 6 to 8.
Average: EUR, AUD, NZD. The preferred range is from 3 to 5.
Weak: GBP, CAD/ The preferred range is from 1 to 2.
The charts were provided in the article: "Forex Currency Score Classification for Wk13".
13 Weeks Currency Score Strength for Week 16 / 17 April 2016
The 13 Weeks Currency Strength and the 13 Weeks Average are provided here below. This data and the "3 months currency classification" are considered for deciding on the preferred range. Because it is not ideal nor desired to change the range for a currency every single week, we perform several checks to avoid this.
- First of all the strength over a period of 13 weeks. See each row for more information.
- Then the 13 weeks average over a period of 13 weeks. See the row last row called "Avg. 13 wks."
- The amount of weeks that a currency is stronger than another currency can also be evaluated.
- The TA Charts for each Time Frame can also be consulted.
- Besides these the "13 weeks Currency Classification" chart of each currency is also consulted and compared. These have been updated and can be found in the article: "Forex Currency Score Classification for Wk13".
At the moment we can see that the AUD has a higher "Avg. 13 wks." score compared to the USD. The AUD has the same score as the CHF.
The USD and the CHF are both strong currencies in the "13 weeks Currency Classification". The AUD and the USD are pairs that could well change in the "13 weeks Currency Classification".
- At the moment it is too soon to make this change based on only the higher "Avg. 13 wks."
- The AUD had also 8 times a higher score in the last 13 weeks so it is possible that the pairs will change classifications soon.
- When looking at the Classification chart itself it is clear to see that the AUD is stronger lately.
- However, the Monthly and Weekly charts of this specific pair are showing a strong pullback but not yet a clear trend change. It is now at a resistance level which was a support in the period Q2, 2015.
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Currency Score Comparison for Week 16 / 17 April 2016
"Comparison table" and the "Ranking and Rating list"
The Forex Currency Comparison Table compares each currency with its counterpart based on the Currency Score. For more information about the currency Score of this week you can read the article "Forex Ranking, Rating and Score" which is published every week together with this article.
By using the comparison table here below you get a view without the volatility and statistics as opposed to the "Ranking and Rating list". Only the strength of each currency against the counterparts is analyzed by using the Technical analysis charts of the 4 Time Frames that are also used for the "Ranking and Rating List".
The information from the Comparison Table is the source for calculating the "Ranking and Rating List" where this list uses additionally the volatility and statistics for creating the best and worst performer in the list from number 1 to 28.
"Comparison table" and the "Currency Score Chart"
The additional analysis of this table compared to the Currency Score table is that the Comparison Table compares the strength between the currencies of each pair. By subtracting the strength of the weaker currency from the stronger currency we have a way to compare each pair combination.
The comparison table provides a way to compare currencies from a longer term perspective of 13 weeks and also simultaneously taking the current trend into account. By coloring the currencies in the X and Y axis according to their Classification, see "Forex Currency Score Classification for Wk13", we can show what the best combinations are. In doing this we apply 2 rules to make it clear.
- First of all only better classified currencies in combination with weaker classified currencies are "Approved".
- The only exception is when 2 currencies are similarly classified but the Currency Score difference is equal to or more than 4.
- It means that each currency should be as far apart from each other as possible in the range from 1 to 8. This means that the classification of the currencies in question may change in the longer term. By using the difference of 4 which is exact the half of the range it seems a safe approach for trading 2 currencies similarly classified.
- Since each classification covers only 2 or 3 scores at the most it means that the currencies should be at least one classification apart from each other in the current week.
- Even though they are in the same classification when looking at the 13 weeks average a currency may be in a weaker/stronger period and may even change its classification in the future. See the current classification for the coming period at the top of this article.
Putting the pieces together
Based on the last "3 months currency classification" and the "Currency Comparison Table" the most interesting currencies for going long seem to be the JAUD and JPY. These are strong or average currencies from a longer term perspective when looking at the last "3 months currency classification". For going short the same analysis can be done and the EUR and the GBP seem to fit best. These are weak or average currencies from a longer term perspective.
Some of these pairs comply for a longer term trade based on the Daily and Weekly chart. We will look at these ones here in a bit more detail. The ones that do not comply may be more interesting for the short term. See the article "Ranking, Rating and Score" for more details.
- When analyzing the Weekly and Daily charts the best pairs for the coming week seem to be the AUD/CAD, AUD/NZD, CHF/JPY, EUR/AUD, EUR/GBP, EUR/JPY, GBP/AUD, GBP/CAD, GBP/CHF, GBP/JPY, GBP/NZD, GBP/USD, USD/JPY.
- A crossed join between the Top 10 pairs in the "Ranking and Rating List", the "Currency Comparison Table" and the pairs with the best charts mentioned here above shows the following interesting pairs: AUD/CAD, CHF/JPY, EUR/AUD, EUR/GBP, EUR/JPY, GBP/AUD, GBP/CAD, GBP/JPY, GBP/NZD, GBP/USD.
- The AUD/NZD and the USD/JPY are not mentioned as "Approved" pairs in the "Currency Comparison Table".
- The USD/JPY and the GBP/CHF. These are not mentioned in the Top 10 of the Ranking and Rating list.
The article "Ranking, Rating and Score" published this weekend contains the following interesting pairs:
- GBP/AUD with the EUR/CAD
- GBP/JPY with the EUR/AUD
- GBP/CAD with the EUR/JPY
From these pairs only the EUR/CAD does not seem to be interesting according to the mentioned crossed join here above.
The Forex "13 Weeks Currency Strength" and the "Comparison Table" provide meaningful data for my FxTaTrader strategy. Besides this I also use the "Forex Ranking, Rating and Score" which is also available once a week on my blog at FxTaTrader.com. If you would like to use this article then mention the source by providing the URL FxTaTrader.com or the direct link to this article. Good luck in the coming week.
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