Pay attention: This is an article based on the monthly strategy. The weekly strategy article is published also.
There will be new articles based on the monthly strategy and the evaluation of the strategy will also be discussed.
This weekend the first articles are published based on the monthly strategy. Please check the article Monthly Ranking And Rating: January for more information.
This article will be published every first Sunday of the month starting next month. The Monthly Currency Score analysis is one of the parameters used for the Monthly Ranking and Rating list which was published already this month. Besides this chart I also provide my monthly analysis on my strategy and the Monthly Forex Ranking and Rating list which is available 2 times a month 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 Monthly 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 3 time frames, the monthly, weekly and daily. The calculation of the Currency Score difference will not be published. Please check the article Forex Currency Score Week 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 are provided for the first time here for the Monthly Currency Score.
- There are a lot of changes this month as can be seen in the screenshot.
- The USD, NZD and the GBP are currently the stronger currencies. The JPY, AUD and the EUR 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 CAD and the CHF 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 month it seems best to go long with the USD, NZD and the GBP. These are also stronger currencies from a longer term perspective and from that perspective they have also the preference to be traded long.
- For the weaker currencies the conclusion is that for the coming week it seems best to go short with the JPY, AUD and the EUR. These are also weaker currencies from a longer term perspective and from that perspective they have also the preference to be traded short.
The fact that e.g. the CAD and the CHF 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 month and this is something to keep in mind too.
There are some rules for taking positions according to the FxTaTrader 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 month can be opened.
Another rule is that a pair outside the Bollinger Band in the monthly 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.
This month (pending) orders were placed for the EUR/NZD. Profit has been made on 2 postitions and another 2 are still open. More details on the traded pairs will be provided in my strategy article that will be published also this month. The possible positions for coming month for the strategy will then also be described.
Last 12 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 12 months is being used as a reference. The currencies are classified for the coming month as following:
- Strong: USD / NZD / GBP
- Average: CHF /CAD
- Weak: EUR / JPY / AUD
This time I added the stronger and weaker currencies.
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.