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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.

Regards

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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, & 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 "compare security" 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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