A novel way to use the currency strength indicator

A novel way to use the currency strength indicator

Try using the currency strength indicator like this – you will be surprised at how it helps you in your forex trading.

00:10

Identifying significant chart levels

00:10

The segment discusses analyzing short-term trading charts, focusing on the significance of the S4 level in price movements. It highlights the importance of recognizing key levels that influence market behavior, especially for traders working with fast timeframes. Understanding these levels helps traders anticipate price reactions and manage their positions more effectively, emphasizing the value of being forewarned about potential support or resistance zones.

01:19

Trading synthetic indices on broker platforms

01:19

The speaker addresses users of MetaTrader 4 and 5, as well as their quantum trading indicators, explaining that most broker platforms now allow trading of single instruments like the SP, Nasdaq, or Dow through synthetic contracts. These synthetic contracts are broker-created and not actual futures contracts, but traders can use the same trading approach. The speaker demonstrates this using the camera levels for MT5, noting slight value differences due to the synthetic nature, and mentions similar levels for NinjaTrader, suggesting the use of a Renko chart for this method.

02:33

Using Renko charts for precise entries

02:33

The segment explains how precise entry and exit points can be identified using support and resistance levels on different charts, such as the US 30 cash (equivalent to the Dow Jones) on a three-minute Camarillo chart and a 15-minute standard time-based chart. It emphasizes the importance of recognizing price-based support and resistance and notes the ability to trade various markets, including Forex and stocks, through contracts offered by brokers without needing a futures account. The speaker also references resources and indicators available to students of their Forex program.

04:22

Currency strength indicator overview

04:22

The presenter explains the currency strength indicator (CSI), which visually displays the flow of money into individual currencies using a heatmap. They highlight a notably strong buying trend in the British Pound throughout the day, with some buying of the Euro as well, though not as significant. Unlike typical sessions where strong moves fade during the New York session, the Pound’s strength has remained consistent, prompting a need to understand which currencies it is being bought against.

05:42

Analyzing Pound strength with matrix indicator

05:42

The speaker introduces a matrix indicator designed to rank currency pairs based on buying activity, focusing on Pound pairs. Recently, the Pound showed strong buying against the Australian Dollar and a significant move against the Canadian Dollar, indicated by high numbers on the hourly chart. The Canadian Dollar appears to have been sold off heavily, as evidenced by moves in Euro-CAD and Pound-CAD. The Pound-AUD pair has entered a congestion phase. The speaker then demonstrates how to overlay individual currency pair lines directly on a chart to better analyze these movements.

07:13

Overlaying currency pair lines on charts

07:13

The speaker explains how to use an indicator on a currency chart by excluding individual currencies that are not part of the trading pair, focusing only on the relevant ones. Using an hourly chart of the pound Aussie pair, they identify a strong move that appears to be overextending, suggesting a potential reversal. They then switch to a three-minute chart to confirm this, observing a rollover or reversal developing on the faster timeframe. The speaker also notes that when certain indicator lines move together, it often corresponds with the actual price action of the pair.

08:20

Divergence and price action in Forex

08:20

The speaker discusses the importance of identifying strong divergence in forex trading, where one currency moves strongly in one direction and the other moves oppositely. They reference the Pound/Ozzy pair as an example, noting a downtrend on the daily chart and the significance of a bullish engulfing candle appearing at the bottom, which could indicate a potential reversal or temporary pause in the trend.

08:52

The speaker explains that the bullish engulfing candle at the end of the month might be influenced by various market flows affecting individual currencies. Although the volume under the candle is reasonable, it is lower than expected. This suggests the possibility of the primary downtrend resuming after a brief interruption or consolidation.

09:27

They highlight that the Pound/Ozzy is still in a downtrend since breaking below the volume point of control. The chart also shows two large volatility candles in the past, indicating significant price action requiring a break lower to confirm the trend. Since April 22nd, the downtrend has been consistent, demonstrating clear price movement in this pair.

10:03

The speaker emphasizes the usefulness of the currency strength indicator (CSI) for trading. By displaying CSI levels on individual charts, traders can stay focused on relevant currency pairs and filter out unrelated currencies. This approach helps track the movement of currency pairs more effectively and aids in making informed trading decisions.

10:38

Trend analysis with Renko charts

10:38

The speaker discusses analyzing multiple timeframes using Renko charts, highlighting how pullbacks are identified within primary and secondary trends. The Renko chart shows a persistent upward primary trend with minor pullbacks, but recent changes suggest a potential trend reversal, indicated by shifts in color from dark blue to bright red. With the New York session ending, any further price movement is expected to be minimal, signaling a likely end to significant trend changes for the session.

By Anna Coulling – creator of volume price analysis