An amazing indicator that determines how strong each base currency is and assigns to it a score from 0 to 10 by comparing it against 9 of its counter-currencies.
In this way you can get the whole picture of how well each specific currency is performing against the overall market.
What Does The Currency Power Indicator Do?
- Identifies strong and weak currencies
- Instantly compares each currency against 9 of its currencies
- Helps identify currency pair combinations that are strong up or down trending
- Simplifies the analysis by providing a value of 0-10
- Utilisation of 10 trend indicators
How Does The Currency Power Indicator Work
Find Strong and Weak Currencies
This indicator shows a value of 0 to 10 for each of 10 base currencies showing how strong the specific base currency is.
- A value closer to 10 implies a strong base currency whose value is increasing.
- A value closer to 0 implies a weak base currency whose value is decreasing.
This value is calculated by comparing a currency against several of its counter currencies to provide a general overview of how strong this base currency is in the markets and not just against a single currency.
Find Strong Trending Pairs to Trade
Look for a base currency with a high score (eg above 6.5) and for a base currency with a low score (eg bellow 4.5). Buy the currency with the high score while selling the currency with the low score.
Example 1: CAD has a high score of 8.0 while EUR has a low score of 3.4. So sell EUR and buy CAD. Hence SELL EURCAD. It can be seen at the chart below how EURCAD is falling.
http://www.theforexcabin.com/wp-cont...AD-example.png
Example 2: AUD has a high score of 7.1 while NZD has a low score of 2.6. So buy AUD and sell NZD. Hence BUY AUDNZD. It can be seen at the chart below how AUDNZD is rising.
http://www.theforexcabin.com/wp-cont...ZD-example.png
Use of 10 popular Trend indicators to calculate the strength of each pair
- Long Moving Average
- Short Moving Average
- Moving Average Crossover
- Moving Average Convergence Divergence (MACD) vs MACD Signal
- Moving Average Convergence Divergence (MACD) vs zero line
- Acceleration
- Relative Strength Index (RSI)
- Average Directional Index (ADX)
- Parabolic Stop and Reverse (SAR)
- Momentum