Forex Focus  |  OCT 2006

Forex Focus by Ian Copsey

Stocks & Commodities V. 24:10 (16-23): Forex Focus by Ian Copsey Access to foreign exchange trading has opened up exciting trading options for the retail trader. You can now trade alongside corporations and institutions in a highly liquid market that is global, traded around the clock, and highly leveraged. Before jumping into this market, however, we must understand the factors that affect the forex market. With that in mind, STOCKS & COMMODITIES has introduced Forex Focus to better prepare the retail trader to participate in the currency market. Relative Spread Strength As A Long-Term Cyclic Tool Having a hard time identifying cycle peaks? This indicator can help confirm cycle highs and lows. I use time cycles within my analysis a great deal, but one of the common problems in doing so is identifying cycle peaks. So I set out to create an indicator that could be used as a proxy for cycle highs and also help confirm cycle lows. The indicator I ended up with is quite simple, simply measuring the relative strength index (RSI) of the spread between two simple moving averages. This is why I refer to it as the relative spread strength (RSS). The objective was to record the strength of the expansion of the spread that occurs in a move in one direction and then record the contraction as the market corrects, causing the moving averages to move back toward each other.

by Ian Copsey