Talking Points:
- StrongWeak app allows us to focus on the biggest movers
- AUD/JPY could move lower towards 92.00
- AUD/USD could move lower towards 0.8000
I am all about simplicity and efficiency in most aspects of my life, trading included. So when FXCMApps.com came out with the StrongWeak app, I was hooked. Not only can this application save us time by finding the biggest market movers instantly, it can give trend traders a direction bias as well. Today, we learn how to read the StrongWeak application and look at two trade setups based on their current levels.
Using the StrongWeak App
The StrongWeak app can be downloaded here. This application has a price tag of $99, but for a limited time can be downloaded for free if you make a $2,000 deposit into an FXCM account (no minimum trading volume requirements). The application can be downloaded and installed just like any other program on a Windows PC.
StrongWeak focuses on 8 currencies, EUR, GBP, USD, JPY, CHF, CAD, AUD, and the NZD, across 4 times frames: M15, H1, H4, and D1. It calculates how many pips each currency has gained or lost against all of the other currencies and then adds them all together. The premise of StrongWeak is to find what currencies have been the strongest and the weakest against all other currencies in pips, with the hopes of pairing them together and looking for trading opportunities.
A screenshot of StrongWeak that was taken at the time this article was written is posted below. On the left side, we have the aggregate results for each time frame and currency. On the right, the charts are separated into individual time frames. Whichever side you prefer, it gives us the same information regardless.
Learn Forex: The StrongWeak App Aggregate Scores.
(Created using FXCM's StrongWeak App)
I prefer looking at the Daily data points for each currency since I am more of a longer term trader. There are two currencies that stand out as the strongest (USD & JPY), and one currency that stands out as the weakest (AUD). Using these currencies, we create two currency pairs that have the potential to become actual trade setups, the AUD/JPY and the AUD/USD. It is now time to analyze these pairs with our direction bias. If the AUD is weak and the USD & JPY are strong, we want to look into selling AUD/JPY and selling AUD/USD.
The AUDJPY Trade Setup
Pulling up an AUD/JPY chart, it is clear how this pair has shown up on the StrongWeak app as an extreme. We’ve had a relentless downtrend for the last 5 weeks including the last 24 hours where the pair has aggressively attacked 94.00, a previous swing low. Adding a couple trend lines on our chart, the next major support level appears to be around 92.00, approximately 180 pips away.
Learn Forex: AUDJPY Heading Lower Towards Support at 92.00
(Created using FXCM's Marketscope 2.0 Charting Package)
So within a couple minutes, we’ve identified a pair with a lot of momentum, attacking a recent support level, with its next support level 180 pips away. These are the type of trend trading setups we want to be looking for.
The AUD/USD Trade Setup
The 2nd pair that StrongWeak identified was the AUD/USD. This setup is fairly similar to the AUD/JPY trade above, but rather than needing to draw trend lines connecting highs and lows, we can draw horizontal support levels extended from two major swing lows.
The Aussie is approaching support near 0.8700 (0.8662 to be exact) which has prevented price from breaking lower for an extended period of time. Price has temporarily crossed below support a couple of times, but we have yet to see a Daily close below this level. If that were to happen, it could be treated as a short breakout trade.
The next major support level on the AUD/USD comes from the swing low back in May 2010 around 0.8000. This could be an appropriate area to set a profit target for a long term short position, as long as we are using proper money management.
Learn Forex: AUDUSD Could Break Lower Towards 0.8000
Quick & Easy
The StrongWeak app does a very good job at honing in on the pairs that are moving and allows traders to quickly identify if there are trading opportunities or not. The two examples above were based on today’s movements, but each day the StrongWeak app will update and can provide more ideas. If you would like to test these trades risk-free, download a Free Forex Demo account today with free charts and real-time pricing data.
Good trading!
---Written by Rob Pasche
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