What I'd like to discuss is calculation of an
Over-Bought and Over-Sold index for each
of 28 major Currency Pairs. I've done this
work about a year ago and it's a practical guide
for short term scalping.
Most of the attempts to do this use "lame"
Moving Averages. But I've used the "internals"
of Currency Strength analytics to yield a reliable
over-bought / over-sold / neutral continuous
index.
If we have a "reliable" index, then we will generally
"fade" the index value above a given threshold of
"distortion" (either positive or negative). I'll just
discuss in general how the calculation or estimate
is derived.
Over-Bought Currency Pairs will be taken Short and
Over-Sold Currency Pairs Long. The rationale for this
is that we are looking at a "distortion" of the particular
Currency Pair, as against its "Fair Value" or expected
value.
We expect this distortion to be resolved in the short
term so this can be used for short term scalping. I'll
follow up with more.
HyperScalper
Over-Bought and Over-Sold index for each
of 28 major Currency Pairs. I've done this
work about a year ago and it's a practical guide
for short term scalping.
Most of the attempts to do this use "lame"
Moving Averages. But I've used the "internals"
of Currency Strength analytics to yield a reliable
over-bought / over-sold / neutral continuous
index.
If we have a "reliable" index, then we will generally
"fade" the index value above a given threshold of
"distortion" (either positive or negative). I'll just
discuss in general how the calculation or estimate
is derived.
Over-Bought Currency Pairs will be taken Short and
Over-Sold Currency Pairs Long. The rationale for this
is that we are looking at a "distortion" of the particular
Currency Pair, as against its "Fair Value" or expected
value.
We expect this distortion to be resolved in the short
term so this can be used for short term scalping. I'll
follow up with more.
HyperScalper
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