1 Answers
The absolute currency strength is a technical indicator used in the technical analysis of foreign exchange markets. It is intended to chart the current and historical gain or loss of a currency based on the closing prices of a recent trading period. It is based on mathematical decorrelation of 28 cross currency pairs. It shows absolute strength momentum of selected major currency.
The ACS is typically used on a 15*period timeframe, calculated as a percentage gain or loss. This indicator is not measured on a scale like relative currency strength.Shorter or longer timeframes are used for alternately shorter or longer outlooks. Extreme high and low percentage values occur less frequently but indicate stronger momentum of currency.
ACS is in most cases used as support indicator for relative currency strength indicator. But it can be used by itself for currency trading. One can use absolute currency strength for pattern trading as well. Combination of RCS and ACS indicators gives entry and exit signals for currency trading.