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Reading the latest ideas presented here yesterday, I realized that I had a very similar indicator made that captures some of this idea but I was using it differently before. I was using it to calculate the price of a basket of currencies.
After looking at it as if its the currency strength, looks like its able to predict the future movement really well. Here is a screenshot to begin with:
The red line is the new currency strength indicator and in green is the price. The strength here is a leading indicator telling me where the price should be.
Now to get to the interesting part of how the calculations were made. What I’m trying to do is get the price of USDCAD without using CAD and only use USD. As I just wrote this, made me think that I should also show on the chart the price of USDCAD without using USD. Let me get a screenshot of that and show it here as well.
And above is the same chart as from before but with the blue line showing the price of USDCAD without using USD.
Think about that I said, the price of USDCAD without CAD and another without USD. I guess using the word price is a bit misleading because I’m calculating here isn’t the price, but pips. How many pips the currencies that doesn’t have CAD (for the first case) moved relative to the USD. And what I’m interesting in is the general direction to spot divergences. And this is how I would trade with this.
So how would I create a synthetic currency that is similar to USDCAD first without CAD. And then without USD? That’s the question
Here is another with EURJPY. Trade possibilities are everywhere it seems
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