MT5 Currency Strength indicator - page 2

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Giorgio
98
Giorgio  
lippmaje :
I am still puzzled by the term 'currency strength'. What does it mean in relation to all those forex pairs a currency can build? So it may be that currency A is weak if put up against currency B, but strong against currency C, now what. How to derive the overall currency strength? I've read about USDX, EURX, etc. Is this what the topic starter is asking about?

There are many different ways to calculate the "strength" of a currency, for example:

If you want to analyze the EUR / USD pair you can calculate the "strength" of the EUR in relation to the other 8 major currencies (or all 28), for example EUR / JPY in the timeframe you took into consideration (for example the daily ) rose 2.1% (+2,1%) compared to the opening price (green candle on daily), EUR / CAD fell 1.2% today so EUR lost 1.2% (- 1.2%) .... Continue with the others, remembering that the first currency of the pair gains if the price goes up (example EUR / CAD, EUR), the second currency gains if the price goes down (CAD). In the end, sum up the results: + 2.1% -1.2% .... = (for example) 13.5% (that is the "strength" of the EUR today). Do the same thing with the USD and then compare them for example if the "strength" of the USD is 5.6% then it means that the EUR today is stronger than the USD ("buy" on EUR / USD, of course with other confirmations). This is just one example of the calculation that can be done to calculate "strength", there are many different ones.

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