How to best use currency strength oscillator?

<p id="isPasted">Curved lines represent the movements of currency pairs:</p><ul style="box-sizing: border-box; margin: 0px; padding: 0px; position: relative; color: rgb(128, 128, 128); font-family: &quot;Open Sans&quot;, sans-serif; font-size: 14px; font-style: normal; font-variant-ligatures: normal; font-variant-caps: normal; font-weight: 400; letter-spacing: normal; orphans: 2; text-align: start; text-indent: 0px; text-transform: none; widows: 2; word-spacing: 0px; -webkit-text-stroke-width: 0px; white-space: normal; background-color: rgb(255, 255, 255); text-decoration-thickness: initial; text-decoration-style: initial; text-decoration-color: initial;"><li style="box-sizing: border-box; list-style: none; font-size: 16px; padding: 5px 0px 5px 32px; position: relative;"><p>The higher the line, the stronger the currency growth;</p></li><li style="box-sizing: border-box; list-style: none; font-size: 16px; padding: 5px 0px 5px 32px; position: relative;"><p>The lower the line, the stronger the currency fall.</p></li></ul><p style="box-sizing: border-box; margin: 0px 0px 10px; color: rgb(119, 119, 119); font-family: &quot;Open Sans&quot;, sans-serif; line-height: 22px; font-size: 16px !important; font-style: normal; font-variant-ligatures: normal; font-variant-caps: normal; font-weight: 400; letter-spacing: normal; orphans: 2; text-align: start; text-indent: 0px; text-transform: none; widows: 2; word-spacing: 0px; -webkit-text-stroke-width: 0px; white-space: normal; background-color: rgb(255, 255, 255); text-decoration-thickness: initial; text-decoration-style: initial; text-decoration-color: initial;" class="forexqa-img-container"><img alt="LiteFinance: How does the Forex Currency Strength Meter Work?" height="551" src="https://prod-forexqna.s3.amazonaws.com/uploads/froala_editor/images/1739423229535.png" width="1000" style="box-sizing: border-box; max-width: 100%; border: 0px; height: auto; width: 730px;" class="fr-fic fr-dii fr-draggable forexqa-img"></p><p>EURJPY, M15 timeframe</p><p>The EUR line (blue) is high, which means the euro is strong. The JPY line (yellow) is low, which means the yen is weak. The EURJPY is rising.</p><p>According to the indicator author’s idea, if the curved line is in the channel between two horizontal lines, the price impulse is not strong enough to trade.</p><p>Note that a change in the direction of the indicator line does not primarily mean a change in the trend; it means a change in the current trend strength:</p><ul style="box-sizing: border-box; margin: 0px; padding: 0px; position: relative; color: rgb(128, 128, 128); font-family: &quot;Open Sans&quot;, sans-serif; font-size: 14px; font-style: normal; font-variant-ligatures: normal; font-variant-caps: normal; font-weight: 400; letter-spacing: normal; orphans: 2; text-align: start; text-indent: 0px; text-transform: none; widows: 2; word-spacing: 0px; -webkit-text-stroke-width: 0px; white-space: normal; background-color: rgb(255, 255, 255); text-decoration-thickness: initial; text-decoration-style: initial; text-decoration-color: initial;"><li style="box-sizing: border-box; list-style: none; font-size: 16px; padding: 5px 0px 5px 32px; position: relative;"><p>if the line is above the channel but directed downward, it means that the trend is still up, but the growth has slowed down;</p></li><li style="box-sizing: border-box; list-style: none; font-size: 16px; padding: 5px 0px 5px 32px; position: relative;"><p>if the line is below the channel but is directed upwards, the trend is still down, but the decline has slowed down.</p></li></ul><p style="box-sizing: border-box; margin: 0px 0px 10px; color: rgb(119, 119, 119); font-family: &quot;Open Sans&quot;, sans-serif; line-height: 22px; font-size: 16px !important; font-style: normal; font-variant-ligatures: normal; font-variant-caps: normal; font-weight: 400; letter-spacing: normal; orphans: 2; text-align: start; text-indent: 0px; text-transform: none; widows: 2; word-spacing: 0px; -webkit-text-stroke-width: 0px; white-space: normal; background-color: rgb(255, 255, 255); text-decoration-thickness: initial; text-decoration-style: initial; text-decoration-color: initial;" class="forexqa-img-container"><img alt="LiteFinance: How does the Forex Currency Strength Meter Work?" height="547" width="1000" src="https://prod-forexqna.s3.amazonaws.com/uploads/froala_editor/images/1739423229284.png" style="box-sizing: border-box; max-width: 100%; border: 0px; height: auto; width: 730px;" class="fr-fic fr-dii fr-draggable forexqa-img"></p><p>USDCHF, timeframe H4</p><p>The USD line (red) is low and directed down. The CHF line (blue) has turned down, but it is still high, meaning that the CHF is strong. The price chart confirms this, and the USDCHF continues falling.</p><p>Lines cross at the channel border</p><p>Crossing near the border of the channel indicates that one currency begins trending, and another one is moving without a clear direction.</p><p>Rules for crossing at the upper border of the channel:</p><ul style="box-sizing: border-box; margin: 0px; padding: 0px; position: relative; color: rgb(128, 128, 128); font-family: &quot;Open Sans&quot;, sans-serif; font-size: 14px; font-style: normal; font-variant-ligatures: normal; font-variant-caps: normal; font-weight: 400; letter-spacing: normal; orphans: 2; text-align: start; text-indent: 0px; text-transform: none; widows: 2; word-spacing: 0px; -webkit-text-stroke-width: 0px; white-space: normal; background-color: rgb(255, 255, 255); text-decoration-thickness: initial; text-decoration-style: initial; text-decoration-color: initial;"><li style="box-sizing: border-box; list-style: none; font-size: 16px; padding: 5px 0px 5px 32px; position: relative;"><p>If the base currency breaks out the channel upside, and the quoted currency goes into the channel, it signals an uptrend for the currency pair.</p></li><li style="box-sizing: border-box; list-style: none; font-size: 16px; padding: 5px 0px 5px 32px; position: relative;">If the base currency is going into the channel, and the quoted currency breaks out the channel upside, it signals a downtrend.<p>&nbsp;</p></li></ul><p>Let me explain the rules on the example of&nbsp;GBPCHF:</p><p style="box-sizing: border-box; margin: 0px 0px 10px; color: rgb(119, 119, 119); font-family: &quot;Open Sans&quot;, sans-serif; line-height: 22px; font-size: 16px !important; font-style: normal; font-variant-ligatures: normal; font-variant-caps: normal; font-weight: 400; letter-spacing: normal; orphans: 2; text-align: start; text-indent: 0px; text-transform: none; widows: 2; word-spacing: 0px; -webkit-text-stroke-width: 0px; white-space: normal; background-color: rgb(255, 255, 255); text-decoration-thickness: initial; text-decoration-style: initial; text-decoration-color: initial;" class="forexqa-img-container"><img alt="LiteFinance: Lines cross at the channel border" height="547" width="1000" src="https://prod-forexqna.s3.amazonaws.com/uploads/froala_editor/images/1739423229475.png" style="box-sizing: border-box; max-width: 100%; border: 0px; height: auto; width: 730px;" class="fr-fic fr-dii fr-draggable forexqa-img"></p><p>GBPCHF, timeframe H4. The crossing is near the channel border.</p><p>At the upper border, the GBP (the base currency goes into the channel from top to bottom) and CHF (the quoted currency breaks the channel from bottom to top) cross. This indicates the strengthening of the quoted currency, CHF, and the sideways trend for the base currency, GBP. Taken together, this indicates a likely GBPCHF downtrend, which starts after a while.</p><p>Rules for crossing at the lower border of the channel:</p><ul style="box-sizing: border-box; margin: 0px; padding: 0px; position: relative; color: rgb(128, 128, 128); font-family: &quot;Open Sans&quot;, sans-serif; font-size: 14px; font-style: normal; font-variant-ligatures: normal; font-variant-caps: normal; font-weight: 400; letter-spacing: normal; orphans: 2; text-align: start; text-indent: 0px; text-transform: none; widows: 2; word-spacing: 0px; -webkit-text-stroke-width: 0px; white-space: normal; background-color: rgb(255, 255, 255); text-decoration-thickness: initial; text-decoration-style: initial; text-decoration-color: initial;"><li style="box-sizing: border-box; list-style: none; font-size: 16px; padding: 5px 0px 5px 32px; position: relative;"><p>If the base currency breaks the channel downside, and the quoted currency goes up into the channel, it signals a soon downtrend;</p></li><li style="box-sizing: border-box; list-style: none; font-size: 16px; padding: 5px 0px 5px 32px; position: relative;"><p>If the base currency goes into the channel, and the quoted currency breaks out the channel downside, it signals a soon uptrend.</p></li></ul><p style="box-sizing: border-box; margin: 0px 0px 10px; color: rgb(119, 119, 119); font-family: &quot;Open Sans&quot;, sans-serif; line-height: 22px; font-size: 16px !important; font-style: normal; font-variant-ligatures: normal; font-variant-caps: normal; font-weight: 400; letter-spacing: normal; orphans: 2; text-align: start; text-indent: 0px; text-transform: none; widows: 2; word-spacing: 0px; -webkit-text-stroke-width: 0px; white-space: normal; background-color: rgb(255, 255, 255); text-decoration-thickness: initial; text-decoration-style: initial; text-decoration-color: initial;" class="forexqa-img-container"><img alt="LiteFinance: Lines cross at the channel border" height="547" src="https://prod-forexqna.s3.amazonaws.com/uploads/froala_editor/images/1739423229582.png" width="1000" style="box-sizing: border-box; max-width: 100%; border: 0px; height: auto; width: 730px;" class="fr-fic fr-dii fr-draggable forexqa-img"></p><p>The same GBPCHF chart. The crossing at the channel border.</p><p>The base currency GBP goes into the channel from bottom to top, while the quoted currency CHF breaks the channel from top to bottom, it signals a soon uptrend. After the lines cross at the lower border of the indicator channel, the GBPCHF currency pair moves upward.</p><p>Crossing at the channel border is considered a signal of “medium-strength". The currency that goes into a sideways trend does not affect the currency pair’s trend strength in any way. And therefore, the trend strength of the currency pair depends solely on the movement of one currency, the one whose indicator has broken the channel.</p><p>Lines cross outside the channel borders</p><p>The crossing of two indicator lines outside the channel borders means that one currency is strengthening against the other.</p><p>General rules of crossing above the upper channel border:</p><ul style="box-sizing: border-box; margin: 0px; padding: 0px; position: relative; color: rgb(128, 128, 128); font-family: &quot;Open Sans&quot;, sans-serif; font-size: 14px; font-style: normal; font-variant-ligatures: normal; font-variant-caps: normal; font-weight: 400; letter-spacing: normal; orphans: 2; text-align: start; text-indent: 0px; text-transform: none; widows: 2; word-spacing: 0px; -webkit-text-stroke-width: 0px; white-space: normal; background-color: rgb(255, 255, 255); text-decoration-thickness: initial; text-decoration-style: initial; text-decoration-color: initial;"><li style="box-sizing: border-box; list-style: none; font-size: 16px; padding: 5px 0px 5px 32px; position: relative;"><p>If the base currency line breaks through the quoted currency line downside, it signals a downtrend;</p></li><li style="box-sizing: border-box; list-style: none; font-size: 16px; padding: 5px 0px 5px 32px; position: relative;"><p>If the base currency line breaks through the quoted currency line upside, it signals an uptrend.</p></li></ul><p style="box-sizing: border-box; margin: 0px 0px 10px; color: rgb(119, 119, 119); font-family: &quot;Open Sans&quot;, sans-serif; line-height: 22px; font-size: 16px !important; font-style: normal; font-variant-ligatures: normal; font-variant-caps: normal; font-weight: 400; letter-spacing: normal; orphans: 2; text-align: start; text-indent: 0px; text-transform: none; widows: 2; word-spacing: 0px; -webkit-text-stroke-width: 0px; white-space: normal; background-color: rgb(255, 255, 255); text-decoration-thickness: initial; text-decoration-style: initial; text-decoration-color: initial;" class="forexqa-img-container"><img alt="LiteFinance: Lines cross outside the channel borders" height="547" src="https://prod-forexqna.s3.amazonaws.com/uploads/froala_editor/images/1739423230748.png" width="1000" style="box-sizing: border-box; max-width: 100%; border: 0px; height: auto; width: 730px;" class="fr-fic fr-dii fr-draggable forexqa-img"></p><p>GBPUSD, timeframe H1. Indicator lines cross outside the channel borders.</p><p>GBP (blue line) breaks through the USD (red line) upward above the upper channel border. This indicates an increase in the growth rate of the British pound relative to the growth rate of the US dollar. This signals the GBPUSD uptrend is to resume.</p><p>General rules of crossing below the lower channel border:</p><ul style="box-sizing: border-box; margin: 0px; padding: 0px; position: relative; color: rgb(128, 128, 128); font-family: &quot;Open Sans&quot;, sans-serif; font-size: 14px; font-style: normal; font-variant-ligatures: normal; font-variant-caps: normal; font-weight: 400; letter-spacing: normal; orphans: 2; text-align: start; text-indent: 0px; text-transform: none; widows: 2; word-spacing: 0px; -webkit-text-stroke-width: 0px; white-space: normal; background-color: rgb(255, 255, 255); text-decoration-thickness: initial; text-decoration-style: initial; text-decoration-color: initial;"><li style="box-sizing: border-box; list-style: none; font-size: 16px; padding: 5px 0px 5px 32px; position: relative;"><p>If the base currency line breaks through quoted currency line upside, it signals an uptrend;</p></li><li style="box-sizing: border-box; list-style: none; font-size: 16px; padding: 5px 0px 5px 32px; position: relative;"><p>If the base currency line breaks through the quoted currency line downside, it signals a downtrend.</p></li></ul><p style="box-sizing: border-box; margin: 0px 0px 10px; color: rgb(119, 119, 119); font-family: &quot;Open Sans&quot;, sans-serif; line-height: 22px; font-size: 16px !important; font-style: normal; font-variant-ligatures: normal; font-variant-caps: normal; font-weight: 400; letter-spacing: normal; orphans: 2; text-align: start; text-indent: 0px; text-transform: none; widows: 2; word-spacing: 0px; -webkit-text-stroke-width: 0px; white-space: normal; background-color: rgb(255, 255, 255); text-decoration-thickness: initial; text-decoration-style: initial; text-decoration-color: initial;" class="forexqa-img-container"><img alt="LiteFinance: Lines cross outside the channel borders" height="547" src="https://prod-forexqna.s3.amazonaws.com/uploads/froala_editor/images/1739423230713.png" width="1000" style="box-sizing: border-box; max-width: 100%; border: 0px; height: auto; width: 730px;" class="fr-fic fr-dii fr-draggable forexqa-img"></p><p>GBPUSD chart, timeframe M15. Crossing the lines outside the channel border.</p><p>The GBP line crosses the USD line upside, being below the lower channel border. It signals the GBP is strengthening, and the USD continues weakening. Therefore, the GBPUSD is likely to continue growing.</p><p>In general, there is no difference in which side of the channel the currency indicators crossed. My subjective observation is that the farther from the channel border the lines cross, the stronger and longer the subsequent trend.</p><p style="box-sizing: border-box; margin: 0px 0px 10px; color: rgb(119, 119, 119); font-family: &quot;Open Sans&quot;, sans-serif; line-height: 22px; font-size: 16px !important; font-style: normal; font-variant-ligatures: normal; font-variant-caps: normal; font-weight: 400; letter-spacing: normal; orphans: 2; text-align: start; text-indent: 0px; text-transform: none; widows: 2; word-spacing: 0px; -webkit-text-stroke-width: 0px; white-space: normal; background-color: rgb(255, 255, 255); text-decoration-thickness: initial; text-decoration-style: initial; text-decoration-color: initial;" class="forexqa-img-container"><img alt="LiteFinance: Lines cross outside the channel borders" height="543" src="https://prod-forexqna.s3.amazonaws.com/uploads/froala_editor/images/1739423231270.png" width="1000" style="box-sizing: border-box; max-width: 100%; border: 0px; height: auto; width: 730px;" class="fr-fic fr-dii fr-draggable forexqa-img"></p><p>EURCAD price chart, timeframe H1. Example of lines crossing outside the indicator channel</p><p>In the EURCAD price chart, I marked three points where the lines of the live Currency Strength Meter cross outside the channel. At the first point, the lines cross close to the channel's upper border, and the EURCAD rose a little. At the second and third points, the lines cross far from the upper channel border, and the price was rising longer than at the first point.&nbsp;</p><p>&nbsp;Another example:</p><p style="box-sizing: border-box; margin: 0px 0px 10px; color: rgb(119, 119, 119); font-family: &quot;Open Sans&quot;, sans-serif; line-height: 22px; font-size: 16px !important; font-style: normal; font-variant-ligatures: normal; font-variant-caps: normal; font-weight: 400; letter-spacing: normal; orphans: 2; text-align: start; text-indent: 0px; text-transform: none; widows: 2; word-spacing: 0px; -webkit-text-stroke-width: 0px; white-space: normal; background-color: rgb(255, 255, 255); text-decoration-thickness: initial; text-decoration-style: initial; text-decoration-color: initial;" class="forexqa-img-container"><img alt="LiteFinance: Lines cross outside the channel borders" height="546" src="https://prod-forexqna.s3.amazonaws.com/uploads/froala_editor/images/1739423231529.png" width="1000" style="box-sizing: border-box; max-width: 100%; border: 0px; height: auto; width: 730px;" class="fr-fic fr-dii fr-draggable forexqa-img"></p><p>USDJPY chart, timeframe H1. Example of lines crossing outside the channel border</p><p>I marked all crossings outside the channel in the&nbsp;USDJPY&nbsp;chart. In the first case, the JPY line meets the USD line near the upper border. The price went down a little. Next, the indicator sends an opposite signal, and the price returns almost to the same level where it started falling.</p><p>In the second case, the lines meet far from the channel border. The following downtrend continues longer than in the first case.&nbsp;</p><p>Lines cross within the channel</p><p>If the lines are inside the channel, it means that neither currency has a clear up- or downtrend. Note that it is within the channel that the indicator lines intersect most often in a short period.</p><p>I marked four signals in the GBPJPY daily chart.</p><p style="box-sizing: border-box; margin: 0px 0px 10px; color: rgb(119, 119, 119); font-family: &quot;Open Sans&quot;, sans-serif; line-height: 22px; font-size: 16px !important; font-style: normal; font-variant-ligatures: normal; font-variant-caps: normal; font-weight: 400; letter-spacing: normal; orphans: 2; text-align: start; text-indent: 0px; text-transform: none; widows: 2; word-spacing: 0px; -webkit-text-stroke-width: 0px; white-space: normal; background-color: rgb(255, 255, 255); text-decoration-thickness: initial; text-decoration-style: initial; text-decoration-color: initial;" class="forexqa-img-container"><img alt="LiteFinance: Lines cross within the channel" height="549" src="https://prod-forexqna.s3.amazonaws.com/uploads/froala_editor/images/1739423231502.png" width="1000" style="box-sizing: border-box; max-width: 100%; border: 0px; height: auto; width: 730px;" class="fr-fic fr-dii fr-draggable forexqa-img"></p><p>GBPJPY chart, timeframe D1. Example of the crossing inside the channel.&nbsp;</p><ul style="box-sizing: border-box; margin: 0px; padding: 0px; position: relative; color: rgb(128, 128, 128); font-family: &quot;Open Sans&quot;, sans-serif; font-size: 14px; font-style: normal; font-variant-ligatures: normal; font-variant-caps: normal; font-weight: 400; letter-spacing: normal; orphans: 2; text-align: start; text-indent: 0px; text-transform: none; widows: 2; word-spacing: 0px; -webkit-text-stroke-width: 0px; white-space: normal; background-color: rgb(255, 255, 255); text-decoration-thickness: initial; text-decoration-style: initial; text-decoration-color: initial;"><li style="box-sizing: border-box; list-style: none; font-size: 16px; padding: 5px 0px 5px 32px; position: relative;"><p>JPY line crosses the GBP line from top to bottom (№1 and №3) – signals to buy the GBPJPY;</p></li><li style="box-sizing: border-box; list-style: none; font-size: 16px; padding: 5px 0px 5px 32px; position: relative;"><p>GBP line crosses the JPY line from top to bottom (№2 and №4) – signals to sell the GBPJPY.</p></li></ul><p>In the first and the third cases, a trader would make a profit from a very short upward movement. In the fourth case, the sell would be entered in the sideways trend, and the sixth bar would be upward. Only one signal out of four, signal №2, would provide a profitable trade.</p><p>If guided by such signals, the trader will have to enter and exit a lot of multidirectional trades with little profit. Therefore, I would not advise entering trades based on the CSM lines crossing within the channel.</p><p>Mirror crossing</p><p>This is the strongest signal of the Currency Strength Meter. One currency line breaks out the channel upside, which means it is strengthening. The second currency breaks out the channel downside, which means its weakening. So, the pair composed of these currencies should be trading in a strong and long-term term.</p><p>If the base currency line goes up from the channel and the quoted currency indicator goes down beyond the channel, the currency pair could start rising.</p><p style="box-sizing: border-box; margin: 0px 0px 10px; color: rgb(119, 119, 119); font-family: &quot;Open Sans&quot;, sans-serif; line-height: 22px; font-size: 16px !important; font-style: normal; font-variant-ligatures: normal; font-variant-caps: normal; font-weight: 400; letter-spacing: normal; orphans: 2; text-align: start; text-indent: 0px; text-transform: none; widows: 2; word-spacing: 0px; -webkit-text-stroke-width: 0px; white-space: normal; background-color: rgb(255, 255, 255); text-decoration-thickness: initial; text-decoration-style: initial; text-decoration-color: initial;" class="forexqa-img-container"><img alt="LiteFinance: Mirror crossing" height="543" src="https://prod-forexqna.s3.amazonaws.com/uploads/froala_editor/images/1739423231446.png" width="1000" style="box-sizing: border-box; max-width: 100%; border: 0px; height: auto; width: 730px;" class="fr-fic fr-dii fr-draggable forexqa-img"></p><p>GBPJPY price chart, timeframe H1. Mirror crossing signal.</p><p>The vertical red line marks the mirror crossing of the GBP and JPY lines. The GBP goes out from the channel upside, and the JPY line goes down beyond the channel. This is the signal to buy the GBPJPY.</p><p>The vertical yellow line marks a potential entry point, the intersection of the GBP and JPY lines suggesting the equality of powers. Even at this point, there would be a good trade in terms of risk/return ratio.</p><p>If the base currency line goes beyond the channel down, and the quoted currency breaks out the channel upside, the currency pair is to be falling.</p><p style="box-sizing: border-box; margin: 0px 0px 10px; color: rgb(119, 119, 119); font-family: &quot;Open Sans&quot;, sans-serif; line-height: 22px; font-size: 16px !important; font-style: normal; font-variant-ligatures: normal; font-variant-caps: normal; font-weight: 400; letter-spacing: normal; orphans: 2; text-align: start; text-indent: 0px; text-transform: none; widows: 2; word-spacing: 0px; -webkit-text-stroke-width: 0px; white-space: normal; background-color: rgb(255, 255, 255); text-decoration-thickness: initial; text-decoration-style: initial; text-decoration-color: initial;" class="forexqa-img-container"><img alt="LiteFinance: Mirror crossing" height="543" src="https://prod-forexqna.s3.amazonaws.com/uploads/froala_editor/images/1739423231554.png" width="1000" style="box-sizing: border-box; max-width: 100%; border: 0px; height: auto; width: 730px;" class="fr-fic fr-dii fr-draggable forexqa-img"></p><p>The GBPJPY price chart, timeframe H1. Mirror crossing signal.</p><p>The first and the second signals indicate an increased probability of a downtrend: the JPY line breaks out the upper channel border upside, and the GBP line breaks through the lower channel border. In both cases, the currency pair dropped in price. The third signal wouldn’t yield a profit.</p>

<p id="isPasted"><strong>Trend identification (strong vs. weak pairing)</strong></p><ul><li>This is the most common and effective strategy, pairing the strongest currency with the weakest to identify high-momentum trends.&nbsp;</li><li>Identify the strongest and weakest currencies. Look for extreme readings on the oscillator. For example, if the AUD has a very high score and the JPY has a very low one, you have found a potential trend to trade.</li><li>Trade the pair in the direction of the trend. For the AUD/JPY example, you would look for buy opportunities, as the Australian dollar is outperforming the Japanese yen. This strategy aligns your trade with the path of least resistance.</li><li>Confirm with other indicators. Use technical tools like Moving Averages (MAs) or the Relative Strength Index (RSI) on the individual currency pair's chart to find optimal entry points. </li></ul>