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.
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Last 3 months currency classification
The last 3 months currency
classifications from a longer term
perspective
are provided for reference
purposes. The necessary charts can be found in the previous
article Weekly Currency Score Wk11.
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.
The GBP has currently a score of 4 after having lower scores in the last few weeks. If the currency remains at these levels it wil become an average currency. For now it is classified as a stronger currency.
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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 USD is having a score of 5, the GBP a score of 4, the CHF a score of 7 and the CAD a score of 6. A strong currency (USD, GBP) should have by preference a score of 6 or higher and an average currency (CHF, CAD) a score from 3 to 5.The conclusion is:
- Half of the currencies(4) are at the right level except for the the USD, GBP, CHF and CAD.
- There is a strong pullback at the moment for the GBP when looking at the market as a whole.
- There is a light pullback for the USD when looking at the market as a whole.
- There is an increase of momentum for the CHF and the CAD that are getting stronger.
- The pairs that we may look at are all most
probably trending except for the pairs with the USD and GBP 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/NZD with the AUD/CAD
- EUR/CAD with the CHF/JPY
- AUD/NZD with the EUR/CHF
- AUD/CHF with the NZD/JPY
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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/NZD is in a downtrend and within the Bollinger Band.
- The AUD/CAD is in a downtrend and within the Bollinger Band.
- The EUR/CAD is in a downtrend and within the Bollinger Band.
- The CHF/JPY is neutral and for that reason not interesting.
- The AUD/NZD is in a downtrend and within the Bollinger Band.
- The EUR/CHF is in a downtrend and within the Bollinger Band. The pair had a pullback but the downtrend seems to be resuming.
- The AUD/CHF is in a downtrend and within the Bollinger Band. The pair had a pullback but the downtrend seems to be resuming.
- The NZD/JPY is in an uptrend and within the Bollinger Band. The pair had a pullback but the uptrend seems to be resuming.
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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