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An indicator for the strength of a currency

  • #21
  • Jun 20, 2019 6:26pm Jun 20, 2019 6:26pm
Quoting Rafei
{quote} Hi Pivot Ruler, I really appreciate your reply and your comment about using Ichi-Moku trading system. Some years ago I used to trade using indicators like Ichi-Moku and moving averages, but it is some time that I have put aside indicators and trade using support resistance and price action. Nevertheless, by watching this video, my mind really changed about Ichi-Moku thanks to your comment.
My Pleasure,

There are videos on youtube by chaostrader63 that I subscribe to that give me so many more tips on the secrets to the Ichi-Moku Cloud.


I've been learning from this one Thread on here "M5/15 RSI 50/50 Test Journal" He has some EAs that are wonderful as well, that help to identify where to enter into a trade. I like the 3 Bar Reversal Pattern, and the Breakout Entry.

Hope this was helpful, as you were helpful to me.

Thank You.
  • #22
  • Jun 20, 2019 6:43pm Jun 20, 2019 6:43pm
First you have to define Strength..

A quick move of 50 -100 pips is what a lot of traders call "strong"
But usually ends up giving it all back with a day.
How strong really is a move if it can't hold for a day???

Knowing real Strength vs a big move that doesn't hold is key.
There is a huge difference. Study it.. Know it..

Be very careful what you call strong in fx.
The only system that will work is one designed by and for yourself.
  • #23
  • Jun 21, 2019 5:31am Jun 21, 2019 5:31am
Quoting bloodpoodle
First you have to define Strength.. A quick move of 50 -100 pips is what a lot of traders call "strong" But usually ends up giving it all back with a day. How strong really is a move if it can't hold for a day??? Knowing real Strength vs a big move that doesn't hold is key. There is a huge difference. Study it.. Know it.. Be very careful what you call strong in fx.
If you take a Daily Chart, and use Fibs on a downward trend, if the pair reverses above 38.2%, then you don't have a trend anymore.
Is this more of an accurate description? (You can also do this on the 4 hr chart, and 1 hour chart.)
  • #24
  • Jun 21, 2019 12:39pm Jun 21, 2019 12:39pm
Quoting Pivot Ruler
{quote} My Pleasure, ... Thank You.
Thanks again for the useful data on your side.
HE WHO STRONGLY DESIRES TO RISE UP WILL THINK OF A WAY TO BUILD A LADDER.
  • #25
  • Jun 21, 2019 12:42pm Jun 21, 2019 12:42pm
Quoting bloodpoodle
First you ... in fx.
When I saw your post, I decided to create a weekly strength indicator. In this indicator, strength or weakness of a currency is measured using opening price of the week.

I wait for you opinions about this weekly indicator.
Thanks.

Weekly Indicator:
Attached File(s)
File Type: ex4 Strength_waves_all_weekly.ex4   36 KB | 593 downloads
HE WHO STRONGLY DESIRES TO RISE UP WILL THINK OF A WAY TO BUILD A LADDER.
  • #26
  • Jun 21, 2019 12:43pm Jun 21, 2019 12:43pm
Quoting Pivot Ruler
{quote} If you ... 1 hour chart.)
I'd like your description.
HE WHO STRONGLY DESIRES TO RISE UP WILL THINK OF A WAY TO BUILD A LADDER.
  • #27
  • Jun 21, 2019 1:01pm Jun 21, 2019 1:01pm
Quoting Rafei
Now, from indicator, AUD comes back to the last low level and this may be a level for selling AUD again! {image}
The AUD became weaker for about 2 % . If some one sell the AUD (sell all of its pairs), then 2% weakness equals to about 200 pips !

Attached Image (click to enlarge)
Click to Enlarge Name: 2019-06-21_22-23-21.png Size: 45 KB


It is interesting to say that, even if NZD became weaker, still selling AUD (all pairs) gives 200 pips !
This is because of balance.

In other word, based on this indicator, If a currency become stronger (weaker) for x%, then this means x*100 pips !
HE WHO STRONGLY DESIRES TO RISE UP WILL THINK OF A WAY TO BUILD A LADDER.
  • #28
  • Edited 2:07pm Jun 21, 2019 1:16pm | Edited 2:07pm
A overall view on the weak:

Attached Image (click to enlarge)
Click to Enlarge Name: 2019-06-21_22-43-07.png Size: 55 KB


USD was the weakest,

CHF was the strongest.

If someone had sold USD at the beginning of this weak, he/she would earned 900 pips at the end of the weak (now), which 210 pips belong to USDCHF !
HE WHO STRONGLY DESIRES TO RISE UP WILL THINK OF A WAY TO BUILD A LADDER.
  • #29
  • Jun 21, 2019 1:33pm Jun 21, 2019 1:33pm
Quoting Rafei
{quote} The AUD became weaker for about 2 % . If some one sell the AUD (sell all of its pairs), then 2% weakness equals to about 200 pips ! {image} It is interesting to say that, even if NZD became weaker, still selling AUD (all pairs) gives 200 pips ! This is because of balance. In other word, based on this indicator, If a currency become stronger (weaker) for x%, then this means x*100 pips !
Much appreciation for your EA.

As you can see with your Daily chart, for Monday, you might see the USD/CHF most likely will keep its trend and hit the support (or come near it), or maybe surpass it at 0.97162, depending on different factors.

As you can see with the weekly chart, it might reach the green trend line and bounce off it, then it might continue down.

As far as the bollinger bands, this is the weekly chart, and the pair went beyond the lower BB line, it should go down further, but there will be some retracement maybe next week, or if next week is slow, it could happen a week after.
Attached Image (click to enlarge)
Click to Enlarge Name: weekly chart.png Size: 101 KB
  • #30
  • Jun 21, 2019 1:54pm Jun 21, 2019 1:54pm
Quoting Pivot Ruler
{quote} Much appreciation for your EA. ... a week after. {image}
Thanks for your analysis.

I am thinking about selling or buying a currency at the beginning of the weak, based on news ahead and technical analysis.
HE WHO STRONGLY DESIRES TO RISE UP WILL THINK OF A WAY TO BUILD A LADDER.
  • #31
  • Jun 21, 2019 2:23pm Jun 21, 2019 2:23pm
Quoting Rafei
A overall view on the weak: ... USDCHF !
A weak ago, USD was the strongest and gave 900 pips !

Attached Image (click to enlarge)
Click to Enlarge Name: 2019-06-21_23-49-53.png Size: 54 KB
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  • #32
  • Jun 23, 2019 1:33am Jun 23, 2019 1:33am
Quoting Rafei
{quote} As an example of buying / selling a currency, here is AUD and NZD. Today (19 June 2019), at 10:40', the indicator shows that AUD and NZD were getting weaker and so we could sell one or both of them. {image} If we were going to sell AUD, we should did the following trades at the same time: Sell -> AUDCAD Sell -> AUDCHF Sell -> AUDJPY Sell -> AUDNZD Sell -> AUDUSD Buy -> EURAUD Buy -> GBPAUD From this time, if AUD gets weaker, then sum of the trades will be in profit. After some minutes, AUD signal is at a level which can be considered as...
Hi Rafei, your indicator looks very promising...

I have some questions. What kind of info can we extract from the screen?

1. attached screen - green and blue pair - one is getting stronger while the other is getting weaker. It might be a good candidate to buy/sell after (maybe) there will be some distance from zero (a threshold for both I mean that one is "really stronger" and the second is "really weaker")

2. Brown pair was weakening almost all the time - what does it mean? What does mean the slope of the curve? I suppose this is the acceleration of the movement, while strength is the velocity of increase/decrease?

3. a lot is here:

https://www.forexfactory.com/showthread.php?t=586711

and here:

https://www.forexfactory.com/showthread.php?t=584503

(both indis too complicated for me, but I suppose the main idea is good).

4. Another idea (better imho) is to treat this indi as a confirmation, I mean a certain technical situation is present - and we take a position according to the main direction of a pair.

5. You measure the strength of currency - but exactly what it means? Is it a difference from a certain average? Change percentage - but percentage of what?
  • #33
  • Edited 5:01am Jun 23, 2019 4:20am | Edited 5:01am
Quoting Fred-IV
{quote} Hi Rafei, ...
Hi Fred.

Quoting Fred-IV
{quote} ... I have some questions. ...
Very good.

Quoting Fred-IV
{quote} ... What kind of info can we extract from the screen? 1. attached screen - green and blue pair - one is getting stronger while the other is getting weaker. It might be a good candidate to buy/sell after (maybe) there will be some distance from zero (a threshold for both I mean that one is "really stronger" and the second is "really weaker") ...
It is good to notice that each signal in the indicator shows the strength or weakness of an individual currency (not a pair).
By analyzing the past data (back-test), I didn't find any safe level which can be considered as buy or sell levels. There is any probability that a currency which is gotten strong for 2%, may come back to zero strength or even weakness. We don't know the future and if some banks or hedge-funds are going to close their positions or open new positions in trend direction or opposite! Specially, when there are high impact news ahead.
Instead, I suggest trading those levels which strength reacted to theme at least two times. For example, see the following figure:
Attached Image (click to enlarge)
Click to Enlarge Name: 2019-06-23_13-18-11.png Size: 91 KB

This reaction of CHF to the 0.5% level of strength, could be considered as a support and buying the CHF at the second return seems a good idea. Therefore, we could buy CHF (in all pairs), and consider the -0.5% as the stop level and +0.5% or more as the target, so we do the following trades at the same time (simultaneously):
Sell -> AUDCHF
Sell -> CADCHF
Buy -> CHFJPY
Sell -> EURCHF
Sell -> GBPCHF
Sell -> NZDCHF
Sell -> USDCHF

Quoting Fred-IV
{quote} ... 2. Brown pair was weakening almost all the time - what does it mean? What does mean the slope of the curve? I suppose this is the acceleration of the movement, while strength is the velocity of increase/decrease? ...
The brown signal is JPY. That means the JPY was getting weak at that day! The indicator shows the percentage of change ( means: "(old-new) / old * 100" ). So, here, slope of the curve shows the velocity of the change.
Velocity by itself is defined as: ( price2 - price1 ) / ( time2 - time1 ) , which is totally different from change percentage.

Quoting Fred-IV
{quote} ... 3. a lot is here:
https://www.forexfactory.com/showthread.php?t=586711
and here:
https://www.forexfactory.com/showthread.php?t=584503
(both indis too complicated for me, but I suppose the main idea is good). ...
I took a look at the posts you mentioned, testing the indicator proposed there might be a matter of grace. I do not test that. As I know, there is no guarantee that when the strength of two currency is crossing, then they do not come back together soon (by soon, I mean less than 5 minutes!). In addition, when the strength of two currency are equal, that somehow shows that the pair (currency1/currency2) is at or near the opening price of the day! How do you interpret it?

Quoting Fred-IV
{quote} ... 4. Another idea (better imho) is to treat this indi as a confirmation, I mean a certain technical situation is present - and we take a position according to the main direction of a pair. ...
I agree, this indicator helped me to make decision if I can remain in a position or I am in a wrong direction!

Quoting Fred-IV
{quote} ... 5. You measure the strength of currency - but exactly what it means? Is it a difference from a certain average? Change percentage - but percentage of what? ...
I think that this is the first question should be stated here .
According the formula stated at the first post, price change is according to the open price of the day. For example, we want to calculate the change of AUD at the time i, so, we can do as followings:
AUD[i] = ( price(i,AUDCAD) - dayOpen(AUDCAD) ) / dayOpen(AUDCAD);
AUD[i] = AUD[i] + ( price(i,AUDCHF) - dayOpen(AUDCHF) ) / dayOpen(AUDCHF);
AUD[i] = AUD[i] + ( price(i,AUDJPY) - dayOpen(AUDJPY) ) / dayOpen(AUDJPY);
AUD[i] = AUD[i] + ( price(i,AUDNZD) - dayOpen(AUDNZD) ) / dayOpen(AUDNZD);
AUD[i] = AUD[i] + ( price(i,AUDUSD) - dayOpen(AUDUSD) ) / dayOpen(AUDUSD);
AUD[i] = AUD[i] - ( price(i,EURAUD) - dayOpen(EURAUD) ) / dayOpen(EURAUD);
AUD[i] = AUD[i] - ( price(i,GBPAUD) - dayOpen(GBPAUD) ) / dayOpen(GBPAUD);

Please note the minus sign for EURAUD and GBPAUD, that is because in this pairs AUD is the second currency!

When the price of a pair ( currency1 / currency2 ) is increasing, that has two meanings: 1) currency1 is getting stronger and 2) currency2 is getting weaker. We can benefit from both moves!
HE WHO STRONGLY DESIRES TO RISE UP WILL THINK OF A WAY TO BUILD A LADDER.
  • #34
  • Jun 23, 2019 4:50am Jun 23, 2019 4:50am
At the last friday, GBP had a buy opportunity:

Attached Image (click to enlarge)
Click to Enlarge Name: 2019-06-23_14-16-06.png Size: 94 KB


Entry level: -1.3 %
Stop level: -1.8 %
Target Level: -0.8 % or more

Sell -> EURGBP
Buy -> GBPAUD
Buy -> GBPCAD
Buy -> GBPCHF
Buy -> GBPJPY
Buy -> GBPNZD
Buy -> GBPUSD

(trading all GBP pairs, 0.5% gives about 50 pips)

We can find many opportunities like this at a day for 8 currencies!
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  • #35
  • Jun 23, 2019 5:07am Jun 23, 2019 5:07am
Thank you for your answer.

From the last question.
This is something I consider as something flawed, because of the arbitrary choice of the open of the day. This indi will require 3-4 hours of data minimum to show anything reliable, also the results will be different for Tokio, Moscow, London and NY. It is nothing wrong with that, if you are accustomed to how it works for you in your timezone it will work, but discussing with someone from anywhere else will be difficult.

The other strength indis solve this I believe in a different way: they calculate distance from the certain moving average (example - 21 SMA) and there is no arbitrary point of choice when the indi starts. maybe this approach is slightly better in the sense that there we don't have a sudden breach at daily open and we can compare longer term strenght results.

The other indicator (28) - crossing means nothing, it is the slopes that matter - he chooses the pair where currencies have the steepest opposite slopes. It means that one is accelerating and the second one is decelerating (the biggest gain in strength and the biggest loss) and looks for the situation there. I believe the rationale behind is that the trend will be continued, as one currency strongly losses and the other gains strength at the same time: and these are market-wide events unlikely to change without any strong reason (I mean news) and also hard to manipulate.

The interesting thing I spotted on your indi is that the line behaves just like the pair - respects support and resistances, which is strange. But it might mean as you suggest that after a breakout of support - there will be (is possible) a retest and continuation, and market after breakout backs off a little. Very interesting.
  • #36
  • Jun 23, 2019 5:38am Jun 23, 2019 5:38am
Quoting Fred-IV
Thank you for your answer. ...
Thanks for your exact notations.

Quoting Fred-IV
... From the last question. This is something I consider as something flawed, because of the arbitrary choice of the open of the day. This indi will require 3-4 hours of data minimum to show anything reliable, also the results will be different for Tokio, Moscow, London and NY. It is nothing wrong with that, if you are accustomed to how it works for you in your timezone it will work, but discussing with someone from anywhere else will be difficult. ...
For this purpose, I have suggested the weekly indicator in which the behavior is exactly like daily except a bias. So, we can find those exact support/ resistance levels at weekly indicator too.

Quoting Fred-IV
... The other strength indis solve this I believe in a different way: they calculate distance from the certain moving average (example - 21 SMA) and there is no arbitrary point of choice when the indi starts. maybe this approach is slightly better in the sense that there we don't have a sudden breach at daily open and we can compare longer term strenght results. ...
Using moving averages, a new decision variable is added which is the period of MA.

Quoting Fred-IV
... The other indicator (28) - crossing means nothing, it is the slopes that matter - he chooses the pair where currencies have the steepest opposite slopes. It means that one is accelerating and the second one is decelerating (the biggest gain in strength and the biggest loss) and looks for the situation there. I believe the rationale behind is that the trend will be continued, as one currency strongly losses and the other gains strength at the same time: and these are market-wide events unlikely to change without any strong reason (I mean news)...
Thanks for the explanation.

Quoting Fred-IV
... The interesting thing I spotted on your indi is that the line behaves just like the pair - respects support and resistances, which is strange. But it might mean as you suggest that after a breakout of support - there will be (is possible) a retest and continuation, and market after breakout backs off a little. Very interesting. ...
Yes, that is what I'm very interested in. I think that it is because we do consider the exact price levels for the comparison, and this is the advantage of using price levels instead of moving average levels. This is a view as a whole. I mean, when we see that in one pair, the price exceed the local support / resistance, but indicator still is at its support / resistance level, we can consider that the support / resistance level is still valid (in short-term trades).
HE WHO STRONGLY DESIRES TO RISE UP WILL THINK OF A WAY TO BUILD A LADDER.
  • #37
  • Jun 23, 2019 5:53am Jun 23, 2019 5:53am
Quoting Rafei
Another example which shows the strength of EUR against its counterparts: {image} {image} {image} {image} {image} {image} {image} {image}
I am looking for a practical application of this indi.

At the grey arrow you have a start of a GBP increasing strength.

However, at the same time, the green currency looks even better, but then suddenly reverses.

I would choose green, looks better, gaining strength.

I mean it is easy to find something in historical charts, but we are searching for an edge in real time.

For me at this moment the real edge would be - buy a pair where currency 1 is experiencing the biggest buy across pairs and sell 2 where there is the biggest selloff.

Is it ok?

edit: at this point of time I would buy grey pair or green against sell - red or brown.

But maybe this is a slow day, with no strong moves (checked, it is monday so ... I would avoid anyway).
Attached Image (click to enlarge)
Click to Enlarge Name: 2019-06-19_8-58-08.png Size: 35 KB
  • #38
  • Edited 6:26am Jun 23, 2019 6:11am | Edited 6:26am
Quoting Fred-IV
{quote} I am looking for a practical application of this indi. ...
Very good, that is why I am here too.

Quoting Fred-IV
{quote} ... At the grey arrow you have a start of a GBP increasing strength. However, at the same time, the green currency looks even better, but then suddenly reverses. I would choose green, looks better, gaining strength. I mean it is easy to find something in historical charts, but we are searching for an edge in real time. For me at this moment the real edge would be - buy a pair where currency 1 is experiencing the biggest buy across pairs and sell 2 where there is the biggest selloff. Is it ok? edit: at this point of time I would buy grey...
This indicator is based on all pairs and it is better to trade and consider all pairs of a currency at the same time. As you can see in figures I have posted until now, you can benefit from increasing/decreasing of strength/weakness of a currency without considering strength / weakness of other currencies.
If we trade all pairs of a currency at the same time, then there is no need to be aware of other currencies.
That is why I avoid trading strongest currency against weakest (I avoid trading just one pair using this indicator).
For example, I avoid trade EURCAD according to the indicator, instead I trade these all EUR pairs at the same time:
Buy -> EURAUD
Buy -> EURCAD
Buy -> EURCHF
Buy -> EURGBP
Buy -> EURJPY
Buy -> EURNZD
Buy -> EURUSD
Because, in these 7 trades, some are in profit and others in loss, but finally, sum of all trades is in profit, because we bought EUR against all other currencies and we gain 0.5% from EUR that is approximately equal to 50 pips!

0.5% = 0.0050 ≈ 50 pips

(So sorry for my bad English)
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  • #39
  • Edited 7:07am Jun 23, 2019 6:44am | Edited 7:07am
Here we can see that at 9 AM, JPY is strongest and AUD is the weakest. If we sell AUDJPY, the trade will soon loses.

Attached Image (click to enlarge)
Click to Enlarge Name: 2019-06-23_16-09-00.png Size: 77 KB


Here is the chart of the AUDJPY at that time:
Attached Image (click to enlarge)
Click to Enlarge Name: 2019-06-23_16-22-22.png Size: 47 KB


It is not important which one is the strongest and which one is the weakest. We should look for and find an up/down movement of a currency strength and benefit from it.
HE WHO STRONGLY DESIRES TO RISE UP WILL THINK OF A WAY TO BUILD A LADDER.
  • #40
  • Jun 23, 2019 8:18am Jun 23, 2019 8:18am
I have found an script which downloads all historical data needed:

https://www.mql5.com/en/code/25768?u...ce=mt4terminal
HE WHO STRONGLY DESIRES TO RISE UP WILL THINK OF A WAY TO BUILD A LADDER.
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