Forex Strength And Comparison For Week 45 / 2016

In the last week the NZD was the strongest currency and the CAD the weakest. The JPY recovered from the dip and got stronger and the GBP succeeded to get a score of 3 after having been below this score for 8 weeks. The USD lost a lot of strength and is in a dip with a score of 2. 

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13 Weeks Currency Score Strength

The 13 Weeks Currency Strength and the 13 Weeks Average are provided here below.

  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 2016 and is provided here for reference purposes:

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 still 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.
The average score difference of the EUR(Weak) is now significant compared to the CHF(Neutral)this was different in the weeks before. Although the EUR is the strongest currency of all the Weak currencies, the average score it is still too distant from the range of the Neutral currencies, the AUD and CHF.

 

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The Strong Currencies

The NZD recovered from the dip in the last weeks and is the last 2 weeks the strongest currency. The JPY is coming back to the range of the strong currencies ans seems to leave the lower scores of the last period behind. The USD however is now the strong currency in a dip and because of that the difference between the average score of this currency and the strongest Neutral currency, the AUD, has become smaller. Below you can see the Weekly Currency Score Chart with the 6 months data as a reference.

 

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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. For more information about the currency Score of this week you can read the article "Forex Ranking, Rating and Score" which is published every week together with this article.
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.

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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, CHF and JPY

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

For going short the same analysis can be done and the following currencies seem to fit best:
CAD, GBP 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 at the moment is e.g. the:
USD and CHF. 

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: NZD/CAD, CAD/CHF, CAD/JPY, EUR/NZD, GBP/CHF, AUD/CAD and AUD/NZD.

 


 

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

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