Currency Strength Meter Forex Indicator MT4 Free Download Currency Strength Meter Forex Indicator MT4 Free Download

Unfortunately, the MT4 terminal does not have an indicator that can analyze the mutual strength (or power) of currencies. To solve this problem, a free currency strength meter was developed. In this article we will introduce you to this indicator.

Contents:

1. Description
2. Features
3. How to use
4. Conclusions

Description

The Currency Strength Meter indicator (i.e. Currency Strength Meter or Gauge) builds a chart of four currency pairs in real-time mode and displays the strength between currencies. The ticker symbol of the financial instrument is displayed in the lower left corner of the indicator window. The color of the symbol matches the color of the chart in the indicator window. The currency strength measure is plotted vertically and contains values ​​from 0 to 100.

The base currency is the first quoted currency in the currency pair, while the quote currency is the second quoted currency. Taking EUR/USD as an example, the euro is the base currency and the US dollar is the quote currency.

The closer the chart is to 100, the stronger the base currency and the weaker the quote currency (uptrend). It makes sense considering the bigger picture of the market. Therefore, if the indicator signals an uptrend, but the rising price action is weak and unremarkable, it may be better to wait for more reliable buying conditions.

The opposite is also true: the closer the chart is to 0, the stronger the quote currency and the weaker the base currency (downtrend).

The chart near 50 shows that the currencies are roughly evenly matched in strength, with no clear trend.

Currency strength meter function

When analyzing currency strength, the term "correlation" is often used. Unfortunately, the MetaTrader 4 terminal does not have an indicator that can calculate the value of this parameter.

Correlation (dependence) is a coefficient that reflects the strength of a currency's unidirectional or multidirectional movement. It can be inverse (trends in different directions) and forward (trends in similar directions).

The given parameters are usually published on top financial websites. However, with the built-in currency strength measurement scale of the Currency Strength Meter, you can monitor this dependence directly in the indicator window.

As in the example above, the currency pairs' charts are negatively correlated - as shown by their close values ​​of 20 and 80 on the currency strength scale.

As for the third scenario, both currency pairs move in the same direction, indicating a direct correlation.

Therefore, using the CurrncyStrengthMeter indicator, you can find out in real time which currency is most demanded by Forex market participants and use it to develop your trading strategy.

How to use currency strength meter

This indicator does not generate signals for opening positions, but provides a common understanding of the market positioning of the analyzed currency pair.

This example shows that the EUR/USD, GBP/USD and NZD/USD currency pairs are all above 50. This tells us about the strength of the Euro, GBP and NZD against the USD.

The USD/CAD chart is moving parallel to the above mentioned pair below the 50 level – this indicates USD/CAD weakness.

Therefore, by comparing the currencies mentioned above, the US dollar is weaker against all other currencies. With this conclusion in mind, you can plan your Forex trading more effectively.

Timeframe priorities should be kept in mind when using this digital product. The chances of making profitable trades are higher on high time frames. It does this by reducing market noise. However, theoretically there will be fewer entries on this time frame.

Conversely, there may be more entry points on shorter timeframes, but the quality of the trading signals may be compromised by high volatility.

Conclusions

At first glance, using four charts simultaneously seems too complex.

You can eliminate this small drawback by selecting fewer charts to build or changing their visualization (line thickness and style).

After all, when you customize and check this indicator, you will quickly get used to it and soon see its practical benefits in your trading system.

Currency Strength Meter Forex Indicator MT4 Free Download