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When online forex trading, it is important to know the relative strength of the currencies compared to each other. Knowing this you can establish the trend of currencies compared to other currencies.

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At Expert-4x we have devised a very simple technique to do this. We use the monthly, weekly, daily and 4 hour charts to get a view of how currency crosses are performing against each other. In this table we have used the USD, GBP, EUR, JPY, CHF. This can be extended to the AUD and CAD or any other currency you wish. We determine the trend of the crosses by using simple indicators such as the direction that the 3 moving average is pointing, or the direction that the quick MACD signal line is pointing, candle formations and trendline directions. On the table below we then simply record the trend as UP, DOWN or FLAT. The table then gives an overall reading on how currencies compare with each other by showing how a currency compares against all the other currencies in a particular timespan. The 1st reading on the monthly part of the table shows that the USD is down against all currencies except the JPY.

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By doing this for all the currencies for all the timespans and accumulating the readings we very quickly can tell that the USD has been the weakest currency and the JPY not far behind. The GBP has been the strongest currency with the EUR the second strongest.

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So how do we use this information? You should always try to trade crosses that are trading the strongest currency against the weakest currency. For example we should look for buy opportunities in crosses such as GBP/ USD or GBP / JPY to trade in the direction of the major trend.