Monthly Currency Score: April
Forex Technical Analyst Trader | Mar 31, 2015 01:04AM ET
The Currency Score analysis is one of the parameters used for the Ranking and Rating list which was published earlier this week. Besides this analysis and the corresponding chart I also provide the monthly analysis on my strategy and the Forex ranking and rating list which is available 2 times a month on this blog.
It is recommended to read the page Currency score explained and Models in practice for a better understanding of the article. This article will provide my analysis on the 8 major currencies based on the technical analysis charts using the MACD and Ichimoku indicator on 3 time frames, the monthly, weekly and daily. The result of the technical analysis are the 2 screenshots in this article showing the Currency Score and the Currency Score Difference.
Last 12 months currency classification
The last 12 months currency classification from a longer term perspective are provided for reference purposes. See for more information the article: Monthly Currency Score for Jan. where the charts are available. There are no changes since January and the currencies are classified for the coming months as follows:
- Strong: USD / NZD / GBP
- Average: CHF /CAD
- Weak: JPY / AUD / EUR
Currency Score
For analyzing the best pairs to trade this classification is the first issue. When looking at the most recent score that is used for the coming period we can see in the screenshot below that all the currencies fit nicely within the proposed range for each classification. These are as follows: Strong > 5 , Weak < 4 and average are 4 and 5. The conclusion is:
- All the currencies are at the right level except for the CAD and the JPY, they switched places.
- There are no significant pullbacks at the moment except for the JPY which is having a light pullback.
- The pairs that we may look at are all most probably trending.
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Currency Score difference
According to the Ranking and Rating list already published this month the following pair combinations look interesting.
- EUR/USD with the GBP/AUD
- EUR/NZD with the USD/CAD
- AUD/USD with the EUR/GBP
- EUR/USD with the AUD/NZD
When looking at the Currency Score Table here below for this month we can see the currency score differences. The interesting pairs should have by preference a score difference of 4 or higher when they are similarly classified. Or the better classified pair should have a higher score than the counterpart. All the pairs mentioned above comply for trading in the coming month. The Currencies are colored Green, Orange and Red resp. by the classification they have. This way it is easier to see what currencies should have a certain score difference.
The technical analysis is the most important issue to consider before taking positions. The Monthly Chart is being analyzed. I prefer the Bollinger Band for defining where a pair is in the chart. Once a pair is outside a Bollinger Band it is in a strong trend which can cause a strong pullback. Although this may be a good opportunity for other analysts I avoid taking positions because of the possible unexpected strong pullback. Positions are only opened inside the Bollinger Band and this may be at the start of a possible trend or on a good pullback in an existing trend.
- The EUR/USD is clearly in a downtrend but outside the Bollinger Band.
- The GBP/AUD is clearly in an uptrend and nicely within the Bollinger Band.
- The EUR/NZD is clearly in a downtrend but outside the Bollinger Band.
- The USD/CAD is clearly in an uptrend and but outside the Bollinger Band.
- The AUD/USD is clearly in a downtrend and slightly outside the Bollinger Band.
- The EUR/GBP is clearly in a downtrend and slightly outside the Bollinger Band.
- The AUD/NZD is clearly in a downtrend and nicely within the Bollinger Band.
So all the pairs mentioned here are interesting for the coming month. More details on the (possible) traded pairs will be provided in my strategy article that will also be published later on this month. The possible positions for coming month for the strategy will then also be described.
When trading according to the FxTaTrader Strategy some rules are in place. For more information see the page on my blog FxTaTrader Strategy. Depending on the opportunities that may come up the decision to trade a currency may become more obvious at that moment.
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