Forex Strength And Comparison For Week 44 / 2016

The NZD is the strongest currencythe GBP is the weakest. The EUR clearly got stronger in the last week and the JPY weaker. For more details read both of my articles where the relevant Charts and Tables are provided.

______________________________________

13 Weeks Currency Score Strength

The 13 Weeks Currency Strength and the 13 Weeks Average are provided here below. This data and the "13 weeks 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.

  1. First of all the strength over a period of the last 13 weeks is considered. See each row for more information.
  2. Next the 13 weeks average is considered, see the last row called "Avg. 13 wks."
  3. The number of weeks that a currency was stronger than another currency can also be considered.
  4. The TA Charts for each Time Frame could also be consulted.

 

This was updated on 25 September and provided here for reference:

Strong: USD, JPY, NZD. The preferred range is from 6 to 8.
Neutral: CHF, AUD. The preferred range is from 4 to 5.
Weak: EUR, GBP, CAD. The preferred range is from 1 to 3.


The USD (Strong) has an average score higher but close to the AUD (Neutral). It had however 8 times a higher score in the last 13 weeks so it is clearly still stronger but may become a Neutral currency. This was avoided last weeks because of the high scores in the last 4 weeks.
The EUR (Weak) has an average score lower but close to the CHF (Neutral). It had only 6 times a higher score in the last 13 weeks so it is clearly the weaker currency. The EUR however is more in the range of the Neutral currencies than the Weak currencies. Because of the low score of last 3 weeks it remains a Weak currency for now.

_____________________________________

The Weak Currencies

As can be seen the EUR looks like trying to jump out of the lower range by showing 3 times a peak in the last period. The last peak is developing and it is now at a score of 4. The CAD showed some strength in the last period showing a peak but is back to the lower range in the last weeks. The GBP remains clearly the weakest currency of all. Below is the Weekly Currency Score Chart with 6 months data as a reference.

 

_____________________________________

Currency Score Comparison


"Comparison table" and the "Ranking and Rating list"

The Forex Currency Comparison Table compares each currency with its counterpart based on the Currency Score. 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 additionally uses 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 additional value 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 we can show what the best combinations are. In doing this we apply 2 rules to make it clearer.

  1. First of all only better classified currencies in combination with weaker classified currencies are "Approved" when there is a Currency Score difference of at least 1 in the current week.
  2. The only exception is when 2 currencies are similarly classified but the Currency Score difference is equal to or more than 4.
  3. It means that each currency should be as far apart from each other as possible in the range from 1 to 8. The classification of the currencies in question may change in the longer term. By using the difference of 4 which is exact at the half of the range it seems a safe approach for trading 2 currencies which are similarly classified.
  4. Even though currencies may be in the same classification 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 beginning of this article.

______________________________________

Putting the pieces together

Based on the last "13 Weeks currency classification" and the "Currency Comparison Table" the most interesting currencies for going long seem to be the:
NZD, USD and CHF

These are Strong or Neutral currencies from a longer term perspective when looking at the last "13 Weeks currency classification".

For going short these currencies fit best:
GBP, CAD and EUR
These are Weak or Neutral currencies from a longer term perspective.

Currencies with a high deviation seem less interesting to trade because they are less predictable. A good example is: JPY. 

Some of the pairs in the "Currency Comparison Table" comply for a longer term trade based on the Technical Analysis (TA) of the Daily and Weekly chart. For the coming week these seem to be: GBP/NZD, GBP/USD, GBP/CHF, NZD/CAD, USD/CAD, EUR/GBP and AUD/CAD.
 

___________

Disclaimer: The articles are my personal opinion, not recommendations, FX trading is risky and not suitable for everyone.The content is for ...

more
How did you like this article? Let us know so we can better customize your reading experience.

Comments

Leave a comment to automatically be entered into our contest to win a free Echo Show.