Currency Strength Index Indicator
The Currency Strength Index Indicator For MT5 is a dedicated trading tool that measures and compares the strength of different currencies.
The indicator has algorithms that are sensitive to changes in the prices of various currencies. The algorithms work with the slope of a currency to determine its strength. A weak currency is drawn when the negative slope is negative, while a strong currency is positioned when the positive slope is positive.
Basic interpretation of currency slope line signals
- The change of trend direction is displayed when two lines cross.
- A possible new trend is shown when one of the lines enters and stays inside the horizontal lines while the other line goes out.
- A continuous trend is assumed when the two lines go beyond the horizontal bars in the opposite direction.
How to trade with the Currency Strength Index
The image above shows the indicator action on the EURGBP pair on the H1 timeframe. This signals a potential bullish trend after the EUR (dark blue line) and GBP (bright blue line) crossed above the horizontal line.
In addition, the euro line is higher than the pound sterling line, which indicates that the first is stronger than the second. This suggests a change in the direction of the trend, and also implies the possibility of a strong trend momentum on the EURGBP currency pair. Finally, the price action (bullish engulfing candle) was used as a guide to enter a buy trade.
Conclusion
The Currency Strength Index Indicator For MT5 is essentially a trading tool designed to help you monitor the strength or weakness of various currency pairs. The indicator is recommended for beginners, intermediate and advanced forex traders. It is also a reliable tool for scalping, day/intraday and swing trading. Moreover, it can be downloaded for free.