Description
If you've spent any time in the Forex markets, you know how tricky it can be to figure out which currency is genuinely driving a move, especially when you're looking at multiple pairs. I often found myself wanting a clearer way to see the individual performance of major currencies, not just how one pair was behaving.
That’s why I developed this Relative Currency Strength indicator.
The idea is pretty straightforward: it aims to measure and display the relative strength of the AUD, USD, EUR, and JPY. It does this by looking at how each of these currencies is performing against a basket of the others (specifically across pairs like AUDUSD, AUDEUR, AUDJPY, EURUSD, EURJPY, and USDJPY) over a lookback period that you can define.
How I've found it helpful, and how it might help you:
- Better Pair Selection: Sometimes, seeing that, for instance, AUD is consistently strengthening while JPY is weakening can give you a nudge to take a closer look at AUD/JPY. It can help filter down the pairs you focus on.
- Understanding Market Drivers: When a pair like EUR/USD moves, is it mostly USD strength or EUR weakness? This indicator can give you some perspective on that, helping you understand the broader flow.
- Tailor to Your Style:
- You can adjust the
LookbackPeriod(default is 14 bars). A shorter period will be more responsive, a longer one will show more established trends. - There's also a
SmoothingPeriod(default is 5 bars) which applies an EMA to the strength lines. This can help reduce some of the noise if you prefer a smoother output. If you want the raw calculation, just set smoothing to 0.
- You can adjust the
- Clear Visuals: It plots each currency's strength as a separate line in its own window below your main chart, so it doesn’t clutter up your price action.
- Reliable Data: The calculations are done on the close of each bar, so the lines won't repaint or change once a bar is complete.
No indicator is a crystal ball, and this one is no different. It's a tool. I've found it to be a useful part of my analysis process, especially for confirming ideas or getting a quick overview of what the major currencies are up to.
Heads up, given that this indicator is pulling data for all currency pairs to effectively calculate true relative strength, this indicator can be resource heavy and break Ctrader at times if you have other resource heavy indicators as well. I have had this occur once in the past month on my 5 year old PC so it should not happen regularly. But if it does, a simple refresh of the window timeframe or a simple adjustment of the period settings by +/-1 will force a recalculate and the indicator will appear again.
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Please feel free to check out my other indicators!
https://ctrader.com/products/1181
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Summary
The indicator plots each currency’s strength as a separate line in a dedicated window below the main chart, avoiding clutter on price action charts. Calculations are based on the close of each bar, ensuring that the displayed lines do not repaint or change after bar completion. This tool aids in better currency pair selection, understanding whether moves in pairs are driven by strength or weakness of individual currencies, and tailoring analysis to individual trading styles.
Due to its comprehensive data processing across multiple pairs, it may be resource-intensive on some systems. Adjusting period settings or refreshing the chart can resolve occasional performance issues.
Customer reviews
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