Weekly Currency Score, Week 36
The Currency Score analysis is one of the parameters used for the Ranking and Rating list, which was published earlier this weekend. Besides this analysis and the corresponding chart, I also provide the forex ranking and rating list.
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.
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 Week 34. The currencies are classified for the coming weeks as follows:
- Strong: GBP / USD / CHF. The preferred range is from 6 to 8.
- Average: EUR / JPY. The preferred range is from 4 to 5.
- Weak: NZD / AUD / CAD. The preferred range is from 1 to 3.
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 GBP has a score of 5. This is a strong currency and it should have by preference a score from 6 or 8. It has a score at the moment of an average currency.
- The CHF has a score of 4. This is a strong currency and it should have by preference a score from 6 or 8. It has a score at the moment of an average currency.
- The JPY has a score of 7. 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 strong currency.
- The CAD has a score of 6. This is a weak currency and it should have by preference a score from 1 to 3. It has a score at the moment of a strong currency.
The conclusion is:
- Half of the currencies are at the right level when looking at the last 3 months currency classification.
- There is an increase of momentum for the JPY that is getting stronger.
- There is most probably a pullback for the GBP and the CHF when looking at the market as a whole. The uptrend has lost momentum.
- There is most probably a pullback for the CAD when looking at the market as a whole. The downtrend has lost momentum.
- The pairs that we may look at are all most probably trending except for the pairs with the JPY, which are most probably ranging.
- The GBP, CHF and CAD may offer a good opportunity to step in. However, it is important to determine if the pair is indeed having a pullback. For that reason, it is good to see the momentum returning in the pair.
Weekly Currency Score Chart
Currency Score difference
According to the Ranking and Rating list already published this weekend, the following pair combinations look interesting:
- NZD/USD with the AUD/JPY
- AUD/USD with the NZD/CAD
When looking at the Currency Score Table here below for this week, we can see the currency score differences. The interesting pairs should have by preference a score difference of 4 or higher when they are similarly classified. Or the better classified pair should have a higher score than the counterpart. All the pairs mentioned above comply for trading in the coming week. The Currencies are colored Green, Orange and Red resp. by the classification they have. This way it is easier to see what currencies should have a certain score difference.
Currency Score Differences Table
The technical analysis is the most important issue to consider before taking positions. The Weekly Chart is analyzed. I prefer the Bollinger Band® for defining where a pair is in the chart. Once a pair is outside a Bollinger Band, it is in a strong trend, which can cause a strong pullback. Although this may be a good opportunity for other analysts, I avoid taking positions because of the possible unexpected strong pullback. Positions are only opened inside the Bollinger Band and this may be at the start of a possible trend or on a good pullback in an existing trend.
- The NZD/USD is in a downtrend and within the Bollinger Band.
- The AUD/JPY is in a downtrend but outside the Bollinger Band.
- The AUD/USD is in a downtrend and within the Bollinger Band.
- The NZD/CAD 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. If you would like to use this article, then mention the source by providing the URL FxTaTrader.com or the direct link to this article. Good luck in the coming week.
DISCLAIMER: The articles are my personal opinion, not recommendations, FX trading is risky and not suitable for everyone.The content is for educational purposes only and is aimed solely for the use by ‘experienced’ traders in the FOREX market as the contents are intended to be understood by professional users who are fully aware of the inherent risks in forex trading. The content is for ‘Forex Trading Journal’ purpose only. Nothing should be construed as recommendation to purchase any financial instruments.