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Old 02-03-2009, 07:22 PM   #1 (permalink)
 
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How to determine currency strength


Hello all ,

Is there a way to rank or find out which currency is stronger than the other for a particular period and how ?
A reference could help .
I try using my common sense in figuring things out but I want to see if there is a standard way .

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Old 02-03-2009, 08:45 PM   #2 (permalink)
 
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Some thoughts on fundamental factors/currency pairs


Picture a scale . One the left there is one currency , on the right is the other currency in the pair ie . EUR / USD . Euro on the left , USD on the right .

Then look at the important fundamental factors that will affect each currency . Add up the factors for each currency . If the EUR has more factors that will increase demand or decrease supply for the EUR , then the slope of the scale will be positive . If the USD has more fundamental factors that will increase demand , or decrease supply for the USD , then the slope of the scale will be negative .

Within each currency there will be factors that will increase demand , decrease supply , or increase supply or decrease demand . Sometimes this judgement is subjective , but it is one that you have to work with .

To determine the overall weight of the factors on each currency singly , use the same scale . The left side for factors that will increase demand / decrease supply . The right side for factors that will decrease demand / increase supply .

As long as you understand the fundamental factors that will affect supply and demand for currency , you can set this up easily .

Hope this helps .
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Old 02-03-2009, 09:09 PM   #3 (permalink)
 
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thanks epigongrp , but my question is rather referring to a now scenario not a speculative case . You answer though throws light on somethings and I really enjoyed going through it , but what I was asking is that looking at various charts like EUR / JPY , EUR / GBP , EUR / USD , USD / CAD , GBP / USD , USD / JPY , GBP / JPY , CAD / JPY and so on , I want to get a general feeling of strengths of these currency such that I could say that the order in strength of currency is
USD , CAD , JPY , GBP , USD .

Like I tried this and saw that the dollar and yen were stronger some days ago while the euro and sterling were going down but everything seem confusing to me as I noticed some good retracements in the euro and also others and I am hoping if there is a rule of thumb or sort that would help know the various strengths of currencies .
Thanks once again
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Old 02-03-2009, 09:22 PM   #4 (permalink)
 
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Track high , low , & amp ; close for each currency daily . Archive this information and you will have a numerical pattern on how each currency is moving , daily , weekly , monthly , quarterly ...
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Old 02-03-2009, 10:06 PM   #5 (permalink)
 
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thanks epigongrp ,

but isn ' t there a site that has this kind of information already that we all can reference ? Don ' t mind my being lazy ( lol ).
Nevertheless , I will work on it and get my entire analysis worksheet on this thread .

Regards
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Old 02-04-2009, 01:36 PM   #6 (permalink)
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Hi Guys ,

On the prorealtime charting package and I am sure some other advanced charting packages if you right click on the chart you can select & quot ; compare security & quot ; and add as many instruments as you would like over any timeframe to compare their relative strength .

There is also an indicator call relative strength comparison ( not to be confused with the RSI ) that shows you the relative strength of two instruments in indicator format .

If you are interested in prorealtime you can register for it free with end of day data at the link below :

Click Here to Register
for Prorealtime For Free


Hope that helps .

Best Regards ,
Dave
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Disclaimer: Trading is risky and can result in substantial financial loss. As always my posts are simply one traders opinion and should not be taken as trading advice. I am not a financial adviser so everyone please do their own analysis and take responsibility for their own trades.
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Old 02-07-2009, 12:46 AM   #7 (permalink)
 
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Thanks David ,

I first thought the ProRealTime chart is a trading platform but on using it I discovered it is not but for analysis . A good tool I think .
But I am going a lot of training to use it . For example to gather and analyse end of day data as requested in this thread .


Thanks a lot Dave ,
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Old 02-09-2009, 12:41 PM   #8 (permalink)
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My Pleasure . If you have not seen it already I have a free course on how to use the Prorealtime package , which you can find at the link below :

Prorealtime Charts - InformedTrades

While I don ' t have a video on your specific question , Prorealtime does have a video which shows you how to do this which you can find at the link below :

ProRealTime

Hope that helps .

Best Regards ,
Dave
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