The FX AlgoTrader Strength Analyzer is effectively an RSI (Relative Strength Index) aggregator.
RSI is a technical momentum indicator that compares the magnitude of recent gains to recent losses in an attempt to determine overbought and oversold conditions of an asset. It is calculated using the following formula:
RSI = 100 - 100/(1 + RS*)
*Where RS = Average of x days' up closes / Average of x days' down closes.
RSI ranges from 0 to 100. An asset is deemed to be overbought once the RSI approaches 70, ie it could be overvalued and a good candidate for a pullback. Likewise, if the RSI approaches 30, it's an indication the asset may be oversold and therefore likely to become undervalued.
The FX AlgoTrader Strength Analyzer tool aggregate baskets of currency pairs together and then creates an aggregate RSI component for each currency.
Succesful forex traders must be able to see the market at a macro level in order to decide which currency pairs offer the best trading opportunities.
The FX AlgoTrader FX Strength Analyzer provides a real-time aggregated relative strength analysis for EUR,GBP,USD,CHF,JPY,CAD and AUD (The Major Pairs)
The analyzer is provided as an MT4 custom indicator and allows traders to quickly assess the overall aggregated relative strengths of EUR, GBP, USD, CHF, JPY, CAD and AUD on any timeframe.
The system first calculates the average relative strength for each pair and then performs a moving average calculation before displaying the smoothed data in a separate chart window.
The relative strengths are aggregated from the following data:-
EURUSD, EURGBP, EURCHF, EURJPY, EURTRY, EURAUD, EURNZD, EURCAD, EURSEK, EURNOK,EURRUB, EURHUF, EURPLN, EURCZK.
GBPUSD, GBPJPY, GBPAUD, GBPCHF, GBPCAD, GBPNZD, EURGBP
EURUSD, USDJPY, USDCHF, GBPUSD, AUDUSD, NZDUSD, USDCAD, USDTRY, USDZAR, USDSEK, USDNOK, USDSGD USDRUB, USDPLN, USDHUF, USDCZK, USDZAR
USDCHF, GBPCHF, EURCHF, CHFJPY, NZDCHF
USDJPY, GBPJPY, EURJPY, TRYJPY, CADJPY, CHFJPY, NZDJPY, AUDJPY, ZARJPY, USDJPY
AUDUSD, EURCAD, CADJPY, AUDCAD, USDCAD, GBPCAD
AUDUSD, AUDCAD, AUDJPY, AUDNZD, GBPAUD, EURAUD
Hourly real-time analysis of the major forex pairs indicates good potential trading opportunities for:-
Long EURUSD, Short USDJPY & Short CADJPY
Hourly charts for the following pairs confirm the aggregated strength analysis:-
The Hourly analysis provided an early indication of potential opportunities with the pairs shown above. The pairs continued to offer trading opportunities throughout the remainder of the European and US session. Using aggregated relative strength should be combined with suitable entry techniques based on support and resistance to optimise entry and increase the probability of a succesful trade. Traders should not blindly enter trades based on this indicator alone.
We recommend using this indicator in conjunction with the FX AlgoTrader Market Flow indicator , the FX AlgoTrader Pivots Bundle V2 or V3 and for traders looking for additional automation the FX AlgoTrader Pivots Scanner V1.
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