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Forex Traders' Guide to CSI

The Currency Strength Indicator (CSI) is a tool that assigns weighted values to the 8 major currencies to determine their relative strength and weakness, in order to identify trending currency pairs. It considers values on all time frames and pairs the strongest with the weakest currencies. Trends are identified by which currency is in control, with the dominant currency often determining the direction of a currency pair. Comparing readings across time frames can help confirm the durability of trends.

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122 views10 pages

Forex Traders' Guide to CSI

The Currency Strength Indicator (CSI) is a tool that assigns weighted values to the 8 major currencies to determine their relative strength and weakness, in order to identify trending currency pairs. It considers values on all time frames and pairs the strongest with the weakest currencies. Trends are identified by which currency is in control, with the dominant currency often determining the direction of a currency pair. Comparing readings across time frames can help confirm the durability of trends.

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Currency Strength Indicator

(CSI)
A tool to judge the strength or
weakness of the major
currencies
to help find trending pairs
CSI considerations
• Method works on all time frames.
• The 8 major currencies are weighted from
approximately +15 to -15. The higher the
reading, the stronger the currency.
• Pairing is strongest to weakest & 2nd weakest.
• Also 2nd strongest to weakest & 2nd weakest.
• Trend is either up or down depending on
which currency is in control.
Comparison of H1 to H4 time frame
Some observations & facts
• Pairs & Trend is based on last closed bar.
• Turning at extremes is important.
• Crossing at or near zero can be significant.
• Comparison at next higher time frame can be a clue
of the durability of trend.
• Find the currency that most closely follows or is
inverse to the pair trend. That is the dominant or
controlling currency.
• Currencies moving together are more difficult to see
which is in control.
Stronger currency is often on top.
Watch how price usually trends with it.
Finding a trend on a higher time frame
can be very rewarding.
Currencies with similar movement
Pairing selection
Indicator options
• Ability to confuse with graphs of all currencies
• Currency color selection usually uses ‘Light
Colors’. On a black background the ‘Dark Colors’
are automatically selected.
• If broker uses a suffix, you must key in input.
• An alert is given if a critical pair is missing.
• May change font and label colors and sizes.
• May change level color, style, and size.
• May change label starting position and distance
between currencies. At your own risk.
Conclusion
• This is designed to help find trending pairs.
• This doesn’t replace the Simple 123.
• The CSI, like most indicators, is lagging.
• The CSI may help in confirming a trend change
• True divergence Is rarely found and should not
be considered important.
• Remember the ‘Pairs – Trend’ is based on the
last closed price bar.

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