FXminds currency strength

FXminds Currency strength indicator:

The goal of this indicator is to calculate all the currency overall value increases and decreases,
to exploit these by trading a currency that is gaining overall value against a currency that is losing overall value.

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* Fase 1: absolute currency value lines
This script makes theoretical currency absolute currency value line.
It does this by taking the average increase in value from each of the currency pairs the currency has a place in and averaging these increases.
After this, the script makes a factor of the average increase.
Then it multiplies a theoretical value line with this average increase factor, note that this theoretical line start at the value 100.

Example: EUR candle “1”
EUR/USD : +1%
EUR/GBP : +1%
EUR/CAD : +1%
EUR/NZD : +1%
EUR/JPY : +1%
EUR/AUD : +1%

average increase : 1%
average increase factor 1.01
EUR absolute currency value line cande “0” : 100
EUR absolute currency value line cande “1” : 101

Please note that all different exchange rates are weighted equally.
These absolute currency value lines are shown when you set the “indicator modus” setting to “show all absolute value lines”.
When you only want the relevant currency value lines to be shown, set the “indicator modus” setting to “show Base & Quote absolute value lines”.



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* Fase 2:
this script then places a moving average over the self-made absolute currency value lines,
this moving average has a length of n which can be changed by the “currency absolute value line moving average length” setting.
It then calculates the deviation between the currency absolute value line and its moving average in percentages.
this deviation is used to determine whether a currency is gaining or losing value.
These deviations are shown when you set the “indicator modus” setting to “show all absolute value lines deviation % against moving average”.
When you only want the relevant currency value line to be shown, set the “indicator modus” setting to “show Base & Quote absolute value lines deviation % against moving average”.
Then one deviation is starting to trump the other, this is a signal that one currency is gaining value over the other and there is a possible trade to be found.
Please note that if you use the “show Base & Quote absolute value lines deviation % against moving average” setting, the indicator also plots the difference between the two deviations in the form of a histogram.
when on deviation trumps the other and thus there is a signal for a possible trade, this is also shown by the histogram as an 0-line cross.



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* Fase 3:
this script then uses this information to create an entry signal indicator, which is visualized when set the “indicator modus” setting to “plot as entry indicator”.
When using this mode, the indicator also still shows the difference between two deviations histogram.
When looking at the histogram, you can see that the indicator is prone to giving weak signals when two currencies are barely outperforming each other.
To prevent the indicator from giving weak signals, use the “signal line to entry signal smoothing” setting.
With this setting, u can determine the minimum difference in deviation of currency performance needed to create a signal.
Please note that increasing this value makes it so that you get less weak signals, but has the downside that it tends to delay your signals for a bit.
It is also possible to just show the histogram of the difference between the currency performances.
when you want this, set the “indicator modus” setting to “show signal line as 0-cross”.