Image: Modified Overlay Chart USDJPY vs USDCHF (4hr chart)
Function
If you're trading currencies, you know how valuable it is to see multiple assets on a single chart. The Overlay Chart does just that, allowing you to visualize two currencies together. For instance, when you’re looking at the EURUSD chart, this indicator lets you add USDCHF, displaying its price in terms of EURUSD.
Use
This tool shines for traders who rely on the relationship between two currencies or assets. You might hear this referred to in the trading community as 'correlation', 'arbitrage', or more formally as 'co-integration' strategies or 'relative value'. Understanding these relationships can give you the edge you need in your trading strategies.
Changes, Updates, and Improvements
The original Overlay Chart had a tendency to repaint its calculations with each new bar, causing the historical values to fluctuate and become unreliable. The modified version addresses this by fixing the initial reference point, which remains constant unless you reload the indicator or adjust the settings. This means you can trust the relative values you see on your chart. While it still reflects the current prices, it provides a much more stable historical perspective.
Additionally, this updated indicator paints historical data further back in time than the original, giving you a broader context. For those interested, you can check out the original code here.
Inputs
The SET CENTER input designates which bar back in history should serve as the fixed initial point for comparing the two currencies or assets. This is crucial for maintaining consistency in your analysis.
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