An individual currency is getting "stronger" or "weaker" when price changes are measured against all its peers. Looking at one pair chart only gives you a small part of the overall picture.Using currency strength indicator you can observe whole forex market in just one chart. But what about trading signals??
Currency strength indicator has many posibilities for trading, it can be used as:
information tool to realize which currencies are being demanded, this is ideal solution for trend follow traders
help for scalpers looking for strenght trend (trader can see both absolute and relative strenght)
instrument for correlation/spread traders to see reactions of each currencies on moves in correlated instruments (for example CAD/OIL or AUD/GOLD)
Well know currency strength indicator is Forex Flow ndicator from Flowindi.com research group. It is web-based aplication, so everyone can use it. And you can use their FREE version.
Currecny strength trading signals
First one is CROSS signal.
Next signal is TREND BREAK
Last one is signal of divergence
See wikipedia for more information about currency strength.See also RCS and ACS indicators, relative currency strength andabsolute currency strength indicators.
Or visit forex research group - Flowindi.com . You can use Forex Flow indicator for free.
"Basic idea of the indicator is "to buy strong currency and to sell weak currency". If a currency pair (e.g. EUR/USD) goes up, you will be able to determine the origin of the move (change in a streght of EUR and USD) With this signals you can choose the most active forex pair at the moment."
