Currency Strength Index Indicator

Currency Strength Index Indicator

Currency Strength Index Indicator – the best indicator automatically analyzes the strength of all the currencies in real time

Unfortunately, there is no indicator in the MT5 terminal that can analyze the strength (or strength) of currencies in relation to each other. To solve this problem, a free currency strength index was developed. In this article, we will introduce you to the indicator.

Content:
Description
Features
How to use
Conclusions

1. Description

The CurrencyStrengthMeter indicator (that is, the currency strength index or meter) plots all currencies charts in real time and displays the strength of currencies in relation to each other. Ticker symbols of financial instruments are displayed in the upper left corner of the indicator window. Symbol colors correspond to the color of the chart in the indicator window. The currency strength measurement scale is built vertically and contains values ​​from 0 to 100.

The closer the chart is to 100, the stronger the currency (uptrend). When this happens, it makes sense to consider the big picture of the market. So, if the indicator is signaling an uptrend, but the upward price action is weak and unimpressive, it is better to wait for more reliable buying conditions.

The same is true for the opposite situation: the closer the chart is to 0, the stronger the weaker the currency (downtrend).

Charts close to 50 indicate that the strengths of the currencies are approximately equal and there is no clear trend.

2. Currency Strength Index Features
When analyzing the strengths of currencies, the term “correlation” is usually used. Unfortunately, there is no indicator in the Metatrader 5 terminal that can calculate the value of this parameter.

Currency strength index indicator

This parameter is often published online on leading financial websites. However, with the currency strength measurement scale built into CurrencyStrengthMeter, you can track this dependence directly in the indicator window.

Thus, using the CurrncyStrengthMeter indicator, you can find out in real time which currency is most in demand among the participants of the foreign exchange market, and use it to develop your own trading strategy.

3. How to use the currency strength index
The indicator does not generate signals to open trades, but gives a general idea of ​​the market positioning of the analyzed currency pairs.

Thus, comparing all the aforementioned currency pairs, we can conclude that the US dollar is weak against the AUD. With this conclusion in mind, you will be able to plan your Forex trading more effectively.

When using this digital product, you should keep in mind the priority of timeframes. The chances of making profitable trades are higher on higher timeframes. This is achieved by reducing market noise. However, theoretically, there will be fewer entry points on this timeframe.

On the contrary, there may be more entry points on a smaller timeframe, but the quality of trading signals may suffer due to high volatility.

4. Conclusions
At first glance, it may seem to you that the simultaneous use of four charts at once is too complicated.

There are two ways to eliminate this small drawback: choose fewer graphs to build or change their visualization (thickness and line style).

After all, when you set up and try out the indicator, you will most likely get used to it soon and will be able to easily see the practical benefits of using it in your trading system.