Currency Strength Meter Indicator

Knowledge of the strength and weakness of each currency is vital for every forex trader. Our Currency Strength Meter indicator measures the strength of eight major currencies (USD, EUR, GBP, CHF, JPY, CAD, AUD, NZD) by using the Relative Strength Index indicator, also known as RSI. The Currency Strength Meter indicator shows you, simply and quickly, when a currency is oversold, overbought, or in “normal area”. This way, you can identify which currency is the strongest and the weakest.

Our indicator is calculated from 28 currency pairs and works on every MT platform. The CSM indicator uses only seven currency pairs to calculate the rest of the 21 pairs. Therefore, for the correct working of the indicator, you need only these seven pairs in your MT platform: EURUSD, GBPUSD, AUDUSD, NZDUSD, USDJPY, USDCHF, and USDCAD.

Our indicator is calculated from 28 currency pairs and works on every MT platform. The Currency Strength Meter indicator uses only seven currency pairs to calculate the rest of the 21 pairs.

Therefore, for the correct working of the indicator, you need only these seven pairs in your MT platform: EURUSD, GBPUSD, AUDUSD, NZDUSD, USDJPY, USDCHF, and USDCAD.

Note: If the indicator is used in Strategy Tester, all pairs’ data must be downloaded in History Center before (How-to). No downloads are needed if it is added to the chart as usual.

Interpretation of the CSM Indicator

Because our CSM indicator is based on well-known indicators, its interpretation is straightforward.

RSI

Overbought area (the value of CSM is between 70 and 100)
Normal zone area (the value of CSM is between 30 and 70)
Oversold area (the value of CSM is between 0 and 30)
Strong currency (the value of CSM is above the level of 50)
Weak currency (the value of CSM is under the level of 50)

CCI

Oversold area (the value of CSM is under 100)
Normal zone area (the value of CSM is between -100 and 100)
Overbought area (the value of CSM is above 100)
Strong currency (the value of CSM is above the level of 0)
Weak currency (the value of CSM is under the level of 0)

MFI

Oversold area (the value of CSM is under the level of 30)
Normal zone area (the value of CSM is between the levels of 30 and 70)
Overbought area (the value of CSM is above the level of 70)
Strong currency (the value of CSM is above the level of 50)
Weak currency (the value of CSM is under the level of 50)

MACD

How to You Use Currency Strength Meter Indicator?

There are two basic approaches to how to trade currency strength and weakness.

Buy strong currency and sell weak currency - Trend Following strategy. For example, if you see the EUR is strengthening and AUD is weakening, buy EURAUD currency pair. Do not trade if one of currencies is overbought/oversold.
Sell strong currency and buy weak currency - Counter Trend strategy. For example, if USD is overbought and JPY is oversold, sell USDJPY.

You can achieve great results if you use the overbought/oversold concept of currency in conjunction with Price Action or Candlestick patterns. All you have to do is wait for the overbought/oversold of one currency, followed by drawing a candlestick pattern like a hammer or shooting star. Of course, this is just one of the thousands of possible ways to use our currency strength indicator.

It is possible to use the CSM indicator for manual backtest as well. All you have to do is set parameter “Bars_Ago = 0” in indicator settings and download historical data for seven currency pairs which our indicator needs to calculate.

Main Features

A simple comparison of one currency against another
Overbought and oversold area for entering or exiting the trades
Works on every timeframe (M1, M5, M15, M30, H1, H4, D1, W1, MN)
The indicator is non-repainting
Customizable parameters (Colors, Line thickness, RSI period...)
The indicator shows strength and weakness of eight major currencies (USD, EUR, GBP, CHF, JPY, CAD, AUD, NZD)
Excellent results in conjunction with PA and Candlestick patterns
Ideal tool for scalping
Very fast calculation
Ready for backtesting (customizable look-back period)