One of the main features of trading in the Forex market is that trading takes place with a financial instrument (currency pair) consisting of two currencies of any state. This, in turn, determines the specifics of the fundamental analysis of the news background for the two currencies. Each pair at a certain interval for different reasons, both fundamental and market, shows strength or weakness relative to the other, which in turn forms price fluctuations and trends in the market. This characteristic of couples has a cyclical nature.
When the lines of the indicator are built, the value of the MA indicator of a particular currency in the pair is fixed. MA is a moving average, the corner of which is easily defined by the trend. Further, on the basis of the received values, the average angle of inclination for all currency indices is calculated. When calculating, the indicator takes into account the volume of the tick and displays data only on currencies on the current pair, this allows to increase the speed.
Currency Strength signals can be divided into two conditional groups. The first and most obvious is the use of currency index line intersections. That is, at the moment when the index line of one currency crosses another, forming a cross it indicates the growth of the strength of the currency in relation to others, and as a consequence to the continuation of the originated trend.
Currency strength indices move in a certain range of values, hence the second group of signals, the possibility of using the Currency Strength indicator to determine local zones of overbought/oversold of a certain currency. Overbought/oversold zones are defined empirically. The screenshot below shows 2 zones above/below the zero mark, crossing which the indicator signals to us about overbought/oversold of this currency.
|> General settings <|
|Auto Symbols||Automatically select characters from the Market Watch list. If false – consider the pairs listed in The Symbols List|
|Symbols List||List of all the characters to analyze the strength of the current currency pair|
|Count Bars||Number of bars to calculate|
|> Indicator settings <|
|ATR Period||Average True Range period|
|MA Period||Moving Average period|
|Calculate MA||Keep calculating the Moving Average indicator, otherwise the calculation takes place at the closing prices of candles.|
|> Color Settings <|
|Color First||Colour first, main currency|
|Color Second||Color of the second, additional currency|
To sum up, it is safe to say that the DaVinci Strength Currency indicator is an excellent multifunctional assistant to a professional trader in trading on the international forex market.
Simplicity is the key to success!