The currency meter shows the strength of that currency across all pairs with a weighting according to the importance of each pair.
Blue is very weak, red very strong and the idea is to trade the strongest v weakest. I have shown 2 examples of the currency meter. For further information to download and use please go to http://www.currencystrengthmeter.com/
The upper picture shows eur very weak at 1.5 and jpy very strong at 8.3 so you would be looking to sell eurjpy. I'd personally prefer to trade majors as opposed to nzd. Cad and aud don't do much for me either to be honest.
GU charts attached. Before London opened usd was around 4 and gbp thereabouts also. No clear direction. The red candle, arrow down, was a clear lower high close for me, at that time the currency meter showed usd was getting stronger and gbp weaker. At the time of the shooting star usd had moved to around 7 and gbp 2. Clearly gbp was weak across all currencies and usd strong across the board.
This gave a sell around 1.5716. I followed this up with 2 further sells from 1 min chart as the currency meter still showed usd strong and gbp very weak.
This is an open ended request for all interested to contribute thoughts/ideas how to best use the currency meter. At the moment I am still looking at 5 min higher lows/lower highs and re-entry off 1 min charts when the strongest v weakest is clear.
What is obvious is that like VSA trading what happened before is very important with the CM, its relative. If you had strong v weak previously and these turn around you can get very good trades. So you could see for example a higher low with gbp say at 3 and usd at 2. Not very convincing to buy gu you might say. However if gbp was previously 1 and usd was 5 you would have seen gu falling. Now with a higher low and gbp 3 with usd 2 you have a big swing from gbp 1 and usd 5 and good reason to think the move up may have some legs.
All trading norms apply, patience, discipline, money management etc etc. Respecting pivots, proven supp' and rest' areas, round numbers etc etc. The higher low lower high thread http://www.forexfactory.com/showthread.php?t=108544 has the daily pivots and monthly pivots on that I'll still use.
Personally I'll be focusing on eu, gu and ej but having a few others in the background. As a general rule I trade the London session and sometimes the London close/US open overlap. Also we like to keep going until gu has had its 100 pip run. If we get any decent piece of that we are happy.
The currency meter is not the holy grail but hopefully a tool that can genuinely contribute, putting the odds a little more in our favour.
Possible trade set ups:
- strongest v weakest, 5 min hl/lh's and re-entry off 1 min bounces as long as the currencies are staying strong/weak. This appears to be the bread and butter trade. A 4 point spread appears to give very good trades.
- turn, a 4 and 2 for a pair turning to 2 and 4 ie a swing of 4 points (just an example on numbers the idea is the turnaround). GU in particular seems to give nice trades on this 'turn' in strength.
Thanks to Henry Liu for making this freely available. He has thanked the original developers.
I have been classified as a commercial member. I stress I HAVE NO COMMERCIAL/FINANCIAL BENEFIT WHATSOEVER in referring this freely available currency meter. I am not endorsing any other product by Henry Liu, I do not use any of his other services. He has made this product freely available and yet again I thank him for that.