Understanding the CHF Power Indicator
The Power of CHF indicator effectively measures the relative strength of the Swiss Franc (CHF) against other currencies. It calculates its value based on the closing prices of seven different currency pairs that include the CHF.
This indicator is particularly useful for traders who employ mean reversion strategies.
Let’s take a closer look at a hypothetical CHF/USD trading scenario, where CHF is the base currency and USD is the quote currency.
To get started, simply add the Power of CHF to your chart first, followed by the Power of USD.
Two key situations may arise from this setup:
If the indicator curves are close together, this suggests a higher likelihood that the price of the CHF/USD pair will move UP.
However, it’s important not to rely solely on the signals from the Power indicator. Always consider the broader market context, including support and resistance levels.
On the other hand, if the indicator curves are far apart, it indicates a higher probability that the price of the CHF/USD pair will move DOWN.
Once again, remember to assess the overall market situation, including key support and resistance levels.
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