Weekly Currency Score: Week 11
Forex Technical Analyst Trader | Mar 07, 2015 11:27PM ET
The Currency Score analysis is one of the parameters used for the Ranking and Rating list which was published earlier this weekend. Besides this analysis and the corresponding chart I also provide the weekly analysis on my strategy and the Forex ranking and rating list which is available 3 times a week 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 4 time frames, the monthly, weekly, daily and 4 hours. The result of the technical analysis are the 2 screenshots in this article showing the Currency Score and the Currency Score Difference.
Last 3 months currency classification
The last 3 months currency classification from a longer term perspective are provided for reference purposes. There are some changes and the new classification is provided here with the necessary charts which can be found at the bottom of this article. The currencies are classified for the coming weeks as follows:
- Strong: USD / NZD / GBP. The preferred range is from 6 to 8.
- Average: CAD / CHF / JPY. The preferred range is from 3 to 5.
- Weak: EUR / AUD. The preferred range is from 1 to 2.
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 the JPY is having a score of 6 and the NZD a score of 5. A strong currency should have by preference a score of 6 or higher and an average currency a score of 4 or 5. The JPY is getting stronger lately and switched places with the NZD last week.
We can also see that the CHF is having a score of 2 and the AUD a score of 3. A weak currency should have by preference a score of 2 or lower and an average currency a score of 3, 4 or 5. The AUD is getting stronger lately and switched places with the CHF last week.
The conclusion is:
- Most of the currencies are at the right level except for the following combinations. The JPY is a point higher and the NZD is 1 point lower, the AUD is a point higher and the CHF is a point lower.
- There is a light pullback at the moment for the NZD and AUD when looking at the market as a whole.
- There is some increase of momentum for the JPY which is getting stronger and for the CHF which is getting weaker.
- The pairs that we may look at are all most probably trending except for the NZD and AUD which are most probably ranging.
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Currency Score difference
According to the Ranking and Rating list already published this weekend the following pair combinations look interesting.
- EUR/USD with the CHF/JPY
- USD/CHF with the EUR/JPY
- EUR/GBP with the CHF/JPY
- GBP/CHF with the EUR/JPY
When looking at the Currency Score Table here below for this week 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 week. 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 Weekly 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 and nicely within the Bollinger Band.
- The CHF/JPY is in the weekly chart in an uptrend so it is best to avoid this pair although it is within the Bollinger Band.
- The USD/CHF is clearly in an uptrend and nicely within the Bollinger Band.
- The EUR/JPY is clearly in a downtrend and nicely within the Bollinger Band.
- The EUR/GBP is clearly in a downtrend and nicely within the Bollinger Band.
- The GBP/CHF is in the weekly chart in an downtrend so it is best to avoid this pair although it is within the Bollinger Band.
So all the pairs mentioned here are interesting for the coming week except for the CHF/JPY and GBP/CHF. Last week (pending) orders were placed for the EUR/USD, AUD/NZD and the GBP/JPY. Only the EUR/USD is still interesting for the coming week. More details on the (possible) traded pairs will be provided in my strategy article that will also be published this weekend. The possible positions for coming week 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.
Last 3 months currency classification charts
Here below are the charts providing the Currency classifications for reference purposes. There are three charts showing resp. the stronger, average and weaker currencies.
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