Welcome to my "Strength and Comparison" article for the coming
week,
the article "Ranking, Rating and Score" has also been
published.
For analyzing the best pairs to trade looking from a longer term perspective the last 3 months Currency Classification can be used in support.
This was updated on 15 May 2016 and is provided here for reference purposes:
Strong: JPY, CAD, CHF. The preferred range is from 6 to 8.
Average: USD, AUD, NZD. The preferred range is from 3 to 5.
Weak: EUR, GBP. The preferred range is from 1 to 2.
The charts were provided in the article: "Forex Currency Score Classification for Wk20".
The Forex Currency Comparison Table compares each currency with its
counterpart based on the Currency Score. For more information about the
currency Score of this week you can read the article "Forex Ranking,
Rating and Score" which is published every week together with this
article.
By using the comparison table directly below you can get a view without the volatility and statistics as opposed to the "Ranking and Rating list". Only the strength of each currency against the counterparts is analyzed by using the Technical analysis charts of the 4 Time Frames that are also used for the "Ranking and Rating List".
The information from the Comparison Table is the source for calculating the "Ranking and Rating List" where this list uses additionally the volatility and statistics for creating the best and worst performer in the list from number 1 to 28.
The
additional analysis of this table compared to the Currency Score table
is that the Comparison Table compares the strength between the
currencies of each pair. By subtracting the strength of the weaker
currency from the stronger currency we have a way to compare each pair
combination.
The comparison table provides a way to compare currencies from a longer term perspective of 13 weeks and also simultaneously taking the current trend into account. By coloring the currencies in the X and Y axis according to their Classification, see "Forex Currency Score Classification for Wk20", we can show what the best combinations are. In doing this we apply 2 rules to make it clear.
USD and the JPY.
These are strong or average currencies from a longer term perspective when looking at the last "3 months currency classification".
For going short the same analysis can be done and the following currencies seem to fit best:
AUD, NZD and the EUR.
These are weak or average currencies from a longer term perspective.
Currencies with a high deviation seem less interesting to trade because they are less predictable. These currencies are at the moment e.g. the:
USD, GBP, AUD and the CHF.
Unless these currencies offer a clear opportunity based on the longer term they are avoided. However, these currencies may offer opportunities for the short term trader.
Some of these pairs comply for a longer term trade based on the Daily and Weekly chart. We will look at these ones here in a bit more detail.
The
article "Ranking, Rating and Score" published this
weekend contains the following interesting pairs:
Same for the "Currency Comparison Table", only the AUD/JPY and the AUD/USD are mentioned as "Approved".
Besides this article I also use the Forex "Ranking, Rating and Score" which is also available once a week on my blog at FxTaTrader.com. In the article "Ranking, Rating and Score" we look in more detail at the absolute position of the currencies and pairs.
It is recommended to read the page Currency score explained and Models in practice for a better understanding of the article. 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.
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. Thank you.
For analyzing the best pairs to trade looking from a longer term perspective the last 3 months Currency Classification can be used in support.
This was updated on 15 May 2016 and is provided here for reference purposes:
Strong: JPY, CAD, CHF. The preferred range is from 6 to 8.
Average: USD, AUD, NZD. The preferred range is from 3 to 5.
Weak: EUR, GBP. The preferred range is from 1 to 2.
The charts were provided in the article: "Forex Currency Score Classification for Wk20".
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13 Weeks Currency Score Strength for Week 22 / 29 May 2016
The 13 Weeks Currency Strength and the 13 Weeks Average are provided here below. This data and the "3 months currency classification" are considered for deciding on the preferred range. Because it is not ideal nor desired to change the range for a currency every single week, we perform several checks to avoid this.- First of all the strength over a period of 13 weeks. See each row for more information.
- Then the 13 weeks average, see the last row called "Avg. 13 wks."
- The number of weeks that a currency is stronger than another currency can also be evaluated.
- The TA Charts for each Time Frame can also be consulted.
- Besides these the "13 weeks Currency Classification" chart of each currency is also consulted and compared. These have been updated and can be found in the article: "Forex Currency Score Classification for Wk20".
_____________________________________
Currency Score Comparison for
Week 22 / 29 May 2016
"Comparison
table" and the "Ranking and Rating list"
By using the comparison table directly below you can get a view without the volatility and statistics as opposed to the "Ranking and Rating list". Only the strength of each currency against the counterparts is analyzed by using the Technical analysis charts of the 4 Time Frames that are also used for the "Ranking and Rating List".
The information from the Comparison Table is the source for calculating the "Ranking and Rating List" where this list uses additionally the volatility and statistics for creating the best and worst performer in the list from number 1 to 28.
"Comparison
table" and the "Currency Score Chart"
The comparison table provides a way to compare currencies from a longer term perspective of 13 weeks and also simultaneously taking the current trend into account. By coloring the currencies in the X and Y axis according to their Classification, see "Forex Currency Score Classification for Wk20", we can show what the best combinations are. In doing this we apply 2 rules to make it clear.
- First of all only better classified currencies in combination with weaker classified currencies are "Approved".
- The only exception is when 2 currencies are similarly classified but the Currency Score difference is equal to or more than 4.
- It means that each currency should be as far apart from each other as possible in the range from 1 to 8. This means that the classification of the currencies in question may change in the longer term. By using the difference of 4 which is exact the half of the range it seems a safe approach for trading 2 currencies similarly classified.
- Since each classification covers only 2 or 3 scores at the most it means that the currencies should be at least one classification apart from each other in the current week.
- Even though they are in the same
classification when looking at the 13 weeks average a currency may be
in a weaker/stronger period and may even change its classification in
the future. See the current classification for the coming period at the
top of this article.
______________________________________
Putting the pieces together
Based on the last "3 months currency classification" and the "Currency Comparison Table" the most interesting currencies for going long seem to be the:USD and the JPY.
These are strong or average currencies from a longer term perspective when looking at the last "3 months currency classification".
For going short the same analysis can be done and the following currencies seem to fit best:
AUD, NZD and the EUR.
These are weak or average currencies from a longer term perspective.
Currencies with a high deviation seem less interesting to trade because they are less predictable. These currencies are at the moment e.g. the:
USD, GBP, AUD and the CHF.
Unless these currencies offer a clear opportunity based on the longer term they are avoided. However, these currencies may offer opportunities for the short term trader.
Some of these pairs comply for a longer term trade based on the Daily and Weekly chart. We will look at these ones here in a bit more detail.
- When analyzing the Weekly and Daily charts the
best pairs for the coming week seem to be the:
AUD/CAD, AUD/JPY, AUD/NZD, AUD/USD, CHF/JPY, EUR/AUD, EUR/JPY and the USD/CHF. - A
crossed join between the Top 10 pairs in the "Ranking and
Rating List",
the "Currency Comparison Table" and the pairs with the best charts
mentioned here above shows the following interesting pairs:
AUD/CAD, AUD/JPY and the AUD/USD. - The AUD/NZD, CHF/JPY, EUR/AUD, EUR/JPY and the USD/CHF are not mentioned as "Approved" pair in the "Currency Comparison Table".
- The EUR/JPY and the USD/CHF are not mentioned in the Top 10 of the Ranking and Rating list.
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- AUD/USD with the CAD/JPY
- AUD/JPY with the USD/CAD
- AUD/JPY with the USD/CHF
- USD/CAD with the CHF/JPY
Same for the "Currency Comparison Table", only the AUD/JPY and the AUD/USD are mentioned as "Approved".
Besides this article I also use the Forex "Ranking, Rating and Score" which is also available once a week on my blog at FxTaTrader.com. In the article "Ranking, Rating and Score" we look in more detail at the absolute position of the currencies and pairs.
It is recommended to read the page Currency score explained and Models in practice for a better understanding of the article. 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.
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