How universal strength indicator works?

<p id="isPasted">The Universal Strength Meter utilizes a sophisticated algorithm to calculate currency strength by considering a variety of indicators and customizable settings. Each indicator contributes its own unique perspective to the analysis, enabling traders to obtain a well-rounded view of market dynamics. This tool allows users to select from 19 different strength modes, such as RSI, ADX, and MACD, meaning that traders can calculate strength based on metrics that are most relevant to their strategies. For instance, using the Force Index can highlight the impact of volume on price movements, allowing for deeper insights during high volatility periods. 📈</p><p>The influence of timeframes on the calculations is another crucial aspect of the Universal Strength Meter. Traders have the ability to choose from 9 different timeframes, from M1 to MN1, which determines how recent price actions affect the strength evaluation. For example, a trader analyzing strength over the last 10 candles on an M15 chart might identify short-term trends that could suggest potential buy or sell opportunities. Conversely, evaluating strength over a longer timeframe can help in recognizing more persistent trends important for longer-term traders. This multifaceted approach to calculation not only enhances the accuracy of the indicators but also equips traders with the necessary tools to make informed decisions in a fast-paced environment. 🔍</p>

<p id="isPasted">The term Universal Strength Indicator typically refers to a Currency Strength Meter or a specialized Trend Strength Index (like the ADX) that quantifies market momentum across multiple assets or timeframes.&nbsp;</p><p><strong>How Currency Strength Indicators Work</strong></p><p>In the Forex market, these indicators measure the relative power of individual currencies rather than just a single pair.&nbsp;</p><p>Multi-Pair Comparison: The indicator evaluates a currency (e.g., USD) against a basket of others (EUR, GBP, JPY, etc.) by analyzing all 28 major crosses.</p><p><strong>Calculation Methods:</strong></p><ul><li>RSI-Based: It averages the Relative Strength Index (RSI) values of a currency across its various pairings to estimate overall momentum.</li><li>Rate of Change (ROC): Measures the percentage price change over a set period (often 15 weeks) to rank currencies from strongest to weakest.</li><li>Moving Average (MA) Distance: Calculates how far the current price is from key moving averages across multiple pairs.</li><li>The "Strong vs. Weak" Strategy: Traders use these tools to pair the strongest currency with the weakest one (e.g., a strong USD vs. a weak JPY) to identify high-probability trending markets. </li></ul><p><strong>How Trend Strength Indicators (ADX) Work</strong></p><p>If the indicator is used for a single asset, it often refers to the Average Directional Index (ADX), which measures trend intensity regardless of direction.&nbsp;</p><p>Components: It uses three lines—the ADX line (strength), +DI (bullish pressure), and -DI (bearish pressure).</p><p>Scoring System (0–100 Scale):</p><ul><li>Below 25: Weak or non-existent trend (ranging market).</li><li>25–50: Strong, tradeable trend.</li><li>Above 50: Extremely robust or potentially overextended trend.</li><li>Smoothing: The indicator applies smoothing to price data (typically over 14 periods) to filter out market noise and provide a stable view of momentum. </li></ul><p><strong>Key Benefits of Using Strength Indicators</strong></p><ul><li>Protection from Double Exposure: Helps traders avoid entering multiple trades on highly correlated pairs that may fail together.</li><li>Prevents Needless Hedging: Alerts traders to negative correlations (e.g., EUR/USD vs. USD/CHF) so they don't bet against their own positions.</li><li>Objective Analysis: Eliminates the subjectivity of visual chart reading by providing a numeric value for market conviction. </li></ul>