Weekly Currency Score: Week 19
Forex Technical Analyst Trader | May 03, 2015 12:58AM 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 / CHF / NZD. The preferred range is from 6 to 8.
- Average: GBP / CAD. The preferred range is from 4 to 5.
- Weak: EUR / JPY / AUD. The preferred range is from 1 to 3.
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 the following deviations:
- The NZD has a score of 3. This is a strong currency and it should have by preference a score of 6 or higher. It has a score at the moment of an average currency.
- The CAD has a score of 7. This is an average currency and it should have by preference a score from 4 to 5. It has a score at the moment of a strong currency.
- The EUR has a score of 4. This is a weak currency and it should have by preference a score of 1 or 2. It has a score at the moment of an average currency.
The conclusion is:
- Most currencies are at the right level when looking at the last 3 months currency classification except for the NZD, CAD and EUR.
- There is a strong pullback at the moment for the NZD when looking at the market as a whole.
- There is a light pullback for the EUR when looking at the market as a whole.
- There is an increase of momentum for the CAD that is getting stronger.
- The pairs that we may look at are all most probably tredning except for the pairs with the NZD and EUR 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:
- CHF/JPY with the AUD/USD
- AUD/CHF with the USD/JPY
- CAD/JPY with the AUD/CHF
- AUD/CAD with the CHF/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 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 CHF/JPY is in an uptrend and within the Bollinger Band.
- The AUD/USD is in a downtrend and within the Bollinger Band.
- The AUD/CHF is in a downtrend and within the Bollinger Band.
- The USD/JPY is in an uptrend and within the Bollinger Band.
- The CAD/JPY is neutral and for that reason not interesting. The pair could go in an uptrend in the Weekly chart after the coming week.
- The AUD/CAD is in a downtrend and within the Bollinger Band.
Last week (pending) orders were placed for the GBP/JPY. This pair 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.
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 and don't forget to check my weekly forex "Strategy Review" and the "Ranking and Rating list".
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