Disliked{quote} Hi Masofras, first I would like to say thank you for the evolution of the spreadsheet. Please correct me but after having a look at the calculations for the 3rd row it seems to me that there must be a mistake. From my point of view the maximum value could only be 9.0. Let me explain my understanding a little bit using the euro as an example: - You have 7 pairs containing the euro. - Lets assume that the euro is extreme strong and is assigned the value 9.0. - This implies that all the other currencies would be 0.0....Ignored
Currency strength / weakness in the forexgrail spreadsheet is indeed expressed on a scale from 0-9.
If the market were to be in perfect "equilibrium", all currencies would have the value 4.5 (basically the midpoint).
Summed up, the values of the top row (Relative Strength) should always be 8 (currency pairs) * 4.5 = 36.
No matter what the values, this is an easy check to see if the RS values are correct(ly calibrated).
Now, the more the market gets "out of balance", the more interesting things get.
BUT, if the EUR has value 9, this does not necessarily mean that all currencies are zero !!!
Both the original forexgrail spreadsheet and the one that Diallist kindly modified and posted on this forum, have a scale that is - in my opinion - far too rough. See its scale (1 step increments of the Absolute Strength) and lookup table in the screenshot.
Actually, the scale used in the file posted by DingDong is far more precise, using 0.5 step increments, as shown in the second screenshot.
Real aficionados could take things even one step further (and get an even more precise Absolute Strength value) by not using 0.5 step increments, but obtaining the smallest possible increments through the application of a mathematical formula called the 5th Order Polynomial Fit.
A real math brain (I am certainly not one) has been able to figure that one out for me ;-)
In attach the fishing pole I received from him this morning in my mail, in the form of an Excel table.
Free for all to use, but please do not start asking me questions about it...
Happy fishing...
LuXing
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5th Order Polynomial Fit Table.xlsx
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