steve.jarvis's picture

Compare the FX markets. Simples!

Those of you following me on twitter ( @InterpretaSteve ) will be aware that a lot of my time nowadays is spent watching Currency basket charts, looking for emerging new trends which might otherwise be missed by looking at individual FX charts.  For a background of how these are constructed, please see my 21st October blog at http://bit.ly/1XCAnQQ

These basket charts have made it easier for me to update my current rankings each week and in the relatively short space of time I have adopted this procedure, it has been quite an eye-opener in terms of not only when to establish new currency positions, but also knowing when to stay in or when to exit.  The beauty of using basket charts is that volatility is lower, meaning it is less likely that perfectly good positions get exited in times of market uncertainty.

Over recent weeks there have been few changes to my multi-week currency ranking order.  At this time USD & AUD remain among the strongest trending major currencies, with EUR & CHF having not budged from the group of those at the opposite end of the rankings.

As well as looking at the individual basket charts and applying standard technical analysis such as moving averages, trend lines, oscillators, etc, the system I have developed allows me to plot each of the baskets relative to each other from a common start-point, which highlights the relative trend of one currency to another over a given time-frame.  This can be done over any period, but possibly the one which gives the clearest trends is a multi-week chart using hourly plots.

The chart below shows the relative performance over the past 1 month for all of the 10 major currencies I most closely follow (USD, EUR, GBP, JPY, CHF, CAD, AUD, NZD, NOK & SEK).  As can be expected, the AUD & USD are streaks ahead of any others, with CHF & EUR adrift at the bottom of the chart.  The % scale on the right-hand side represents the average change for any of the currencies listed versus the other nine.    In this instance, the AUD has risen on average over the past 1 month by about 3.75% against the other nine currencies.  And likewise, the CHF is down on average over the past 1 month by about 2.45% against the other nine.  By definition, the biggest individual currency pair change over this period has therefore been AUD/CHF.

 

 

 

 

 

 

 

 

 

 

 

 

A few of the individual basket charts are worth a viewing.  Those with clear trends at present which show no immediate signs of ending are the AUD, CHF & EUR, which I have displayed below.  There are signs of possible developments in a number of the other currencies too, for more details of these on a day-to-day basis, the best advice I can given is to contact support@tradermade.com and ask to be set up for a trial of our award-winning FX analysis service!  Incidently, if you would like the ability to view similar basket charts to those which I have developed, you will need access to Tradermade's Maverick charting platform. Again, please contact support@tradermade.com who will be pleased to set this up for you. 

Chart 1/. AUD basket, 1 month (hourly plots).  Chart 2/ CHF basket, 1 month (hourly plots). Chart 3/ EUR basket, 1 month (hourly plots)