It is recommended to read the page Currency score explained and Models in practice for a better understanding of the article. This article will provide my analysis on the 8 major currencies based on the technical analysis charts using the MACD and Ichimoku indicator on 4 time frames, the monthly, weekly, daily and 4 hours. The result of the technical analysis is the 2 screenshots in this article showing the Currency Score and the Currency Score Difference.
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Last 3 months currency classification
The last 3 months currency classifications from a longer term perspective are provided for reference purposes. The necessary charts can be found in the previous article Weekly Currency Score Wk23. The currencies are classified for the coming weeks as follows:
- Strong: USD / CHF / GBP. The preferred range is from 6 to 8.
- Average: NZD / CAD. The preferred range is from 4 to 5.
- Weak: EUR / JPY / AUD. The preferred range is from 1 to 3.
The NZD remains very weak for a period of 8 weeks now with a score between 1 to 3. It seems best to trade this currency by going short having a stronger currency as the counterpart.
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Currency Score
For analyzing the best pairs to trade this classification is the first issue. When looking at the most recent score that is used for the coming period we can see in the screenshot below the following deviations:- The NZD has a score of 1. This is an average currency and it should have by preference a score from 4 to 5. It has a score at the moment of a weak currency.
- The EUR has a score of 5. This is a weak currency and it should have by preference a score from 1 or 3. It has a score at the moment of an average currency.
The conclusion is:
- Most currencies are at the right level when looking at the last 3 months currency classification. The NZD and the EUR are not at the right level.
- There is a strong pullback at the moment for the NZD when looking at the market as a whole. This caused the currency to be qualified as an average currency in week 23.
- There is a strong pullback for the EUR when looking at the market as a whole.
- The pairs that we may look at are all most
probably trending except for the pairs with the NZD and EUR
which are
most probably ranging.
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Currency
Score difference
- GBP/NZD with the CHF/JPY
- GBP/AUD with the NZD/USD
- NZD/CHF with the GBP/JPY
- AUD/CHF with the NZD/USD
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- The GBP/NZD is in an uptrend and and outside the Bollinger Band. It seems best to wait for a pullback to see the pair back again within the Bollinger Band.
- The CHF/JPY is in a uptrend and within the Bollinger Band.
- The GBP/AUD is in an uptrend and outside the Bollinger Band. It seems best to wait for a pullback to see the pair back again within the Bollinger Band.
- The NZD/USD is in a downtrend and just outside the Bollinger Band. Most probably it will be inside when trading starts again.
- The NZD/CHF is in a downtrend and just outside the Bollinger Band. Most probably it will be inside when trading starts again.
- The GBP/JPY is in an uptrend and outside the Bollinger Band. Most probably it will be inside when trading starts again.
- The AUD/CHF is in a downtrend and within the Bollinger Band.
When trading according to the FxTaTrader Strategy some rules are in place. For more information see the page on my blog FxTaTrader Strategy. Depending on the opportunities that may come up the decision to trade a currency may become more obvious at that moment.
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