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The Forex Markets From Strongest To Weakest |
Forex Momentum Index Strategies
Here are four strategies to consider using with Forex Momentum Index:
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1's and 2's are possible candidates for long positions. 17's and 18's are possible candidates for short positions. You could potentially look at going long the currencies with an Forex Momentum Index level at 1 and/or 2, and potentially look at shorting the currencies with an Forex Momentum Index level at 17 and/or 18. The exit could be when the currency drops out of the green zones when you are long, or moves out of the red zone when you are short (please make sure you understand the possible weighting of the US Dollar on your positions. Your brokerage firm can guide you with this). |
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Look for upward and downward changes in the Forex Momentum Index level. A currency which has moved from weakest to strongest is telling you that money is flowing into this currency. You may want to track these currencies as the money flow could potentially continue. The same holds true for currencies dropping in ranking. A currency dropping from a stronger Forex Momentum Index level to a weaker Forex Momentum Index level is telling you that money flow is moving out of that currency. |
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Look at 1's & 2's on pullbacks, and look at 17's & 18's on upward pullbacks. One of the more popular ways to trade currencies is on pullbacks. Wait for a strong currency to pull back to some specific level and then look to enter. These entry levels can be pullbacks to moving averages, Fibonacci levels, or other popular pullback strategies. |
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Wait for reversal set-ups on the extremes, especially markets which have been strong or weak for a long period of time. If a currency is rated a 1 or a 18 for a sustained period of time, it could be reaching overbought or oversold levels. Many large reversals precede these conditions. Ideally, you'll want to short a currency which has been rated 1 for many hours and then begins selling off or dropping in ranking. The same holds true for currencies rated 18. If it's been selling off for many hours/days and then reverses, or its Forex Momentum Index level rises, it may be signaling a reversal is beginning.
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