PatternAlpha

Relative Currency Strength

Our Indicator “Relative Currency Strength” offers an insight into the strength behind the quote and base currency of any Major/Minor Forex Instruments.
Every Forex Instrument is a relative conversion factor between two currencies - a quote currency and a base currency. This indicator calculates the strength for each of the currencies using predefined major Forex pairs to gauge the strength of the underlying Currency. If you are unfamiliar with how a Forex instrument is calculated we will provide an informational link at the end of the description.

This description will provide a High Level description of how our Indicator identifies and visualizes Relative Currencies Strength, followed by how to use the Indicator in your trading. At the end we would like to introduce our team and experience.

High Level Description of “Relative Currency Strength”:
Our indicator dissects the Forex Instrument into 2 values based on the Quote and Base Pair. The indicator uses 5 predefined Forex instruments per currency to calculate the Currency strength. For example, EURUSD forex instrument will display 2 values: EUR as a Quote value and USD as the Base value. Our indicator will use 5 Major Forex Instruments to gauge the strength of EUR, and another 5 Major Forex Instruments to gauge the strength of USD.

Visualisation:
The Base currency is the Blue line and the Quote Currency is the Yellow Line.
The area between the lines will be colored in either Gray, Green or Red - this area will be referred to as “Strength Area”.
If the Base currency is greater than the Quote currency, then the Strength area will be either Gray or Green.
If the Base currency is less than the Quote currency, then the Strength area will be either Gray or Red.
The color of the Strength area changes color depending on the Base/Quote Spread. If the Spread is Small, then the Strength Area is Gray.
If the Spread is wide, then the the accent of the color will be light, otherwise the accent of the color will be dark.


How to use it:
This Indicator is best used as a Trendfollowing Indicator.
For example, if the Strength Area turns Green and you have Bullish confluence on your Trade like a Bull flag , then this would provide an opportunity to enter a Long position and wait until the Strength Area either turns gray or dark green.
Looking at the Base and Quote Lines, will also give you a feeling if both parts of your currency are contributing to your anticipated Price change. That being said, if the base currency line is increasing and the quote currency line is decreasing, then that suggests that the both currencies are contributing to the Price change and hence increasing the probability of a major price Change.



Time frame:
This indicator is programmed to be used on all Timeframes.

Instruments:
Following Currencies will be calculated:
USD
EUR
GBP
NZD
AUD
CHF
JPY
CAD
XAU
XAG
SGD
SEK
NOK

This Indicator will work on all Instruments with at least one of these Currencies.

Our Team:
We are a team of 3 Traders with a combined experience of 40 years. We are using our experiences from the market to create Indicators to Visualize the most relevant Patterns to us in our trading today. Our goal is to reconstruct these patterns to match our understanding of the market and to simplify the process of creating reproducible trading Strategies.


Information Links:
https://www.investopedia.com/terms/c/cur...


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