Identify strong and weak currencies at a glance. Trade strength against weakness.
Combinations with the largest strength differential
Tip: Always trade in the direction of strength. Buy strong currencies, sell weak ones. Avoid trading two currencies with similar strength.
Most traders look at currency pairs (EUR/USD, GBP/JPY, etc.) and try to guess their direction. This is an incomplete approach.
When EUR/USD rises, is it because the Euro is strong or because the Dollar is weak? The answer completely changes your strategy. If the Euro is strong across the board, you can buy EUR against any weak currency. If it is just the Dollar weakening, other XXX/USD pairs will also rise.
The Currency Strength Meter solves this problem by analyzing each currency individually. Instead of guessing which pair to trade, you identify which currency to buy and which currency to sell.
A currency's strength is calculated by analyzing its performance against all other major currencies. For example, to calculate USD strength:
The same analysis is performed for each currency. The result is a score from -100 to +100 showing whether a currency is outperforming or underperforming relative to the others.
The principle is simple: buy the strongest currency against the weakest. This approach maximizes your probability of success because you have momentum in both directions.
Differential of +80. You have strong USD rising AND weak NZD falling.
Differential of only +5. Both currencies are similar in strength. Direction uncertain.
The world's reserve currency. Correlated with Fed rates, DXY, and risk-on/risk-off sentiment.
Second most traded currency. Sensitive to ECB decisions and the Eurozone economy.
The 'Cable'. Highly volatile, sensitive to UK news and Bank of England decisions.
Safe haven currency. Strengthens during panic. Historical carry trade.
Another safe haven currency. The SNB sometimes intervenes to limit its strength.
Commodity currency, linked to China and raw materials. Risk-on.
Correlated with oil (WTI). The Canadian economy is heavily dependent on energy.
Similar to AUD but smaller market. Very sensitive to global sentiment.
For day trading. Strength can change multiple times per day.
Use: Identify intraday opportunities, confirm quick entries.
For swing trading. More stable and reliable trends.
Use: Identify the main direction, filter out counter-trend trades.
For position trading. Underlying macro trends.
Use: Understand the macro context, avoid trading against the underlying trend.
The Currency Strength Meter does not replace technical analysis — it filters it. Here is how to use it:
USD strong (+45), JPY weak (-20) → I look for longs on USD/JPY only. I do NOT look for shorts.
I wait for a pullback to support, a structure break, a continuation pattern... My classic technical setup, but ONLY in the direction of strength.
I have the momentum of both currencies with me. My technical setup is aligned. I can take the trade with more conviction and potentially a better R:R.
Do not fight the market. Identify where money is flowing and follow the move. Strength creates the trend, weakness creates the opportunity.