One of the keys to success as a forex trader is in being able to see currency strength and weakness instantly and across the timeframes, and in early trading this morning we have a classic example described by the Quantum Trading currency strength indicator across the faster timeframes. Here we see the strong buying of the British Pound ( the yellow line) and also the Euro ( the orange line) from the 5 minute through to the 30 minute chart. With both currencies rising so strongly and across the timeframes, it is simply a question of deciding which pair to focus on as the counter currency and trade accordingly.
This set up is one we are looking for constantly, as the reversal in the faster timeframe is then confirmed by its appearance in the slower timeframes ‘downstream’. This can be thought of as the ripples on a pond from throwing a stone, with the water then moving steadily away from the landing point. Here, this strength in both currencies is developing across the time horizon in the same way and so confirming the strength of the reversal from the oversold region on the currency strength indicator and moving firmly higher. The angle of inclination of each, also gives us a further signal that the momentum is very strong. In simple terms, the steeper the angle, then the stronger the move.