The Currency Score analysis is one of the parameters used for the Ranking and Rating list which was published earlier this weekend. Besides this 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.
Because of the high presence of the CHF pairs in the Top 10 it is better to use the Top 15 in the coming period. All the CHF pairs will be ignored for trading until the daily chart starts to show useful data. The favorite pairs in the Top 15 of this list are being analyzed in more detail here. This article will provide my analysis and the FxTaTrader 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 4 time frames, the monthly, weekly, daily and 4 hours. The calculation of the Currency Score difference will not be published. Please check the article Forex Currency Score Wk 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. See for more information the article: Weekly Currency Score Week 3.
- There are a lot of changes this week as can be seen in the screenshot.
- The CHF, USD and the JPY are currently the stronger currencies. The EUR, CAD and AUD 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 NZD and the GBP 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 week it seems best to go long with the CHF, USD and the JPY. However, the CHF is being avoided in the coming period. The JPY is a weaker currency from a longer term perspective so it does not have the preference to go long with.
- For the weaker currencies the conclusion is that for the coming week it seems best to go short with the EUR, CAD and AUD. However, the CAD is an average performer from a longer term perspective so it does not have the preference unless it is traded against a stronger currency or if the currency score difference is significant ( >3) and it is traded against another average performing currency.
The fact that e.g. the NZD and the GBP 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 week and this is something to keep in mind too.
When trading according to the FxTaTrader Hybrid Grid 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 week (pending) orders were placed for the NZD/CAD. 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.
For more information the article "Currency score explained" explains in full detail how the currency score is being generated. In my previous articles various aspects have been analyzed as described above.
Last 3 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 3 months is used as a reference. The currencies are classified for the coming weeks as follows:
- Strong: CHF / USD / NZD
- Average: GBP /CAD
- Weak: EUR / JPY / AUD
This weekend I will also provide the weekly review on my FxTaTrader strategy. Good luck to all and have a great trading week.
Although the explanation may seem simple and clear there is always risk involved. I added a disclaimer to my blog for this purpose. If you would like to use this article then mention the source by providing the URL www.FxTaTrader.com or the direct link to this article.
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. The choice and risk is always yours.