Currency strength: Currency Strength Matrix
Currency strength: Currency Strength Matrix
A forex pair is two currencies. The Currency Strength Matrix ranks the eight majors right now, so you can see which currencies have been moving. It describes how currencies have moved against each other, not which pair to trade.
Indicators describe what price did. They do not tell you what to trade, and they do not predict what price will do next.
The last indicator in the set looks at currencies rather than pairs. It helps you see which currencies have been moving, which is useful context for any pair you study. Like every indicator in this module, it describes; it does not decide.
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1 Strength is relative, and it is about the past
Every forex pair is one currency priced in another (lesson 0.1). When EURUSD rises, the euro gained against the dollar, or the dollar lost against the euro, or both.
A currency strength indicator looks at many pairs at once to separate the two. If the euro rose against the dollar, the yen, the pound and the rest, the euro was strong. If the yen fell against almost everything, the yen was weak.
Two things follow:
- Strength is relative. A currency is strong only compared with the others in the list.
- Strength is measured from candles that already happened. A strong euro against a weak yen describes a move EURJPY has already made. It does not say the move will continue.
Quick check
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2 Currency Strength Matrix: the eight majors, ranked
What it draws. Dashboard ranking the 8 majors by 28-pair RSI strength with bars, plus a descriptive Base-vs-quote row (flags a wide rank gap).
How to read it.
- The ranking. The eight major currencies (USD, EUR, GBP, JPY, CHF, CAD, AUD, NZD) from strongest to weakest. Each gets a strength from 0 to 100, built from the RSI of the 7 pairs it appears in. 50 is neutral; above 50 it has been rising against the others, below 50 falling.
- The bars. The same numbers as bars, so you can see the spread at a glance.
- The Base-vs-quote row. For the pair on your chart, it shows where its two currencies rank. When one is near the top and the other near the bottom, the panel says the rank gap is wide. That is a description of strength, nothing more.
- N/A. If your broker’s server does not offer enough of the 28 pairs, a currency with too few pairs is marked N/A instead of being guessed. Switch on the health row (InpShowHealth) to see which pairs are missing.
The panel updates as the current candle forms, so its numbers move during the candle.
What it does NOT tell you: No trade idea, no LONG/SHORT, no entry/stop/target; nothing about how often a wide gap is followed by a move.
Quick check
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3 The traps
The Matrix is a snapshot: where the eight currencies stand now, not how they got there. Open the pair’s chart to see whether that was a slow drift or a sudden jump.
The traps:
- Treating a wide gap as a trade. The strongest-versus-weakest pair is simply the pair that has already moved most. The Matrix does not measure how often that move continues.
- Ignoring your broker’s pair list. Missing pairs make the readings less complete. The Matrix says so (N/A, the health row); read those flags.
- Forgetting the news. Currency strength can swing in minutes around a central-bank decision or a big data release. A reading from before the news describes a market that no longer exists.
As always, a reason to trade comes from your plan, the stop-loss from the chart’s structure and the size from the 1% rule (lesson 1.3).
Check your understanding
0 of 4 questions right. Answer them all to complete the lesson.