Overview

At Quantum Trading, we like to give you a choice, and to offer what we believe are the ‘best of breed’ alternatives to those indicators many traders use. And this is another example. Many forex traders rely on the traditional (March 1973) DXY indicator to signal strength and weakness in the US dollar, and this works perfectly well. It is an index that has been around for over 30 years. However, times change, and none more so than in the forex market in the last five years. The US dollar still accounts for over 87% of currency transactions, but the significance of other currencies is growing fast, and the general view is the DXY is perhaps not so relevant as it once was, given the constituents of the underlying basket of currencies. Perhaps the three most glaring anomalies are the heavy weighting of the European currencies, the exclusion of the Australian dollar, and the minor weighting of the Japanese yen.

Whilst there are new indices being developed all the time, and indeed Bloomberg have recently launched the BBDXY as an alternative, we believe simplicity is the key, and have therefore developed the USDX index for the TradingView platform. This is based on the FXCM/Dow Jones index, and takes four major currencies, with an equal weighting to deliver the USDX index as follows:

  • Japanese yen (JPY) – 25%
  • Australian dollar (AUD) – 25%
  • Euro (EUR) – 25%
  • British pound (GBP) – 25%

The index is based on a notional 10,000 mini lot contract size and unlike the DXY is therefore quoted to five figures and two decimal places. It is our belief this simple index provides a ‘real world’ view of strength and weakness in the US dollar, with a more representative sample of world currencies. But why not try both – and see which you prefer.

The Quantum USDX indicator can be used in one of three ways:

  • First, as an inverse indicator of a major currency pair, helping you get in, stay in and get out
  • Second, as a confirming indicator for the Quantum Currency Strength indicator, providing a perspective against other currencies
  • Finally, as the ultimate barometer of risk

Whichever approach you adopt, you will no longer have to leave your TradingView platform for a view of the US dollar.

The Quantum USDX indicator works in all timeframes.

Format

By clicking the indicator’s Format button, you can configure the Quantum USDX Indicator’s inputs and style according to your preferences. The Format button appears as a small cog/gear icon beside the name of the indicator at the chart. Clicking the button shows a dialog box for configuring the Inputs and Style options.

Inputs

MA1 Period

This is the period of one of the 2  simple moving averages available on the USDX. It is set to 7 by default. Though this is the faster moving average of the two, you are free to set this to any other timeframe to suit your personal preferences.

MA2 Period

This is the period of the second simple moving average for the USDX. It is set to 14 by default. Though this is the slower moving average, you are free to set this to any other timeframe of your choice.

Line Chart Mode

The Quantum USDX indicator uses a candlestick plot by default but if this property is enabled, it will use a line plot to display the index.

Style

TradingView allows you to customize the indicator’s appearance by changing the properties of each of its plots/lines.

USDX (Candlestick)

This forms the body (open and close price) of the index’s candlesticks.

  • Visible by default, you can untick the checkbox beside its name to hide this line in the chart.
  • Color 0 is set to blue which is the default color of bullish candlesticks. You can click the color box to choose another color from a palette.
  • Color 1 is set to red which is the default color of bearish candlesticks. You can click the color box to choose another color from a palette.

Wick

This forms the shadow (high and low price) of the index’s candlesticks.

  • Visible by default, you can untick the checkbox beside its name to hide this line in the chart.
  • Color is set to black. You can click the color box to choose another color from a palette.

USDX (Line)

This line plots the index when the indicator is in Line Chart Mode.

  • Visible by default, you can untick the checkbox beside its name to hide this line in the chart.
  • Color is set to green. You can click the color box to choose another color from a palette.
  • Thickness is set to 3. Slide the knob to the right to increase the line’s thickness further or slide it to the left to decrease it.
  • Type of plot is set to Line. Please keep this setting.
  • The last option allows you to display a horizontal line that helps you track its current level in the chart. Tick the Price Line checkbox to enable this feature.

MA1

This line plots the first simple moving average on the indicator.

  • Visible by default, you can untick the checkbox beside its name to hide this line in the chart.
  • Color is set to cyan. You can click the color box to choose another color from a palette.
  • Thickness is set to 1. Slide the knob to the right to increase the line’s thickness.
  • Type of plot is set to Line. Please keep this setting.
  • The last option allows you to display a horizontal line that helps you track its current level in the chart. Tick the Price Line checkbox to enable this feature.

MA2

This line plots the second simple moving average on the indicator.

  • Visible by default, you can untick the checkbox beside its name to hide this line in the chart.
  • Color is set to magenta. You can click the color box to choose another color from a palette.
  • Thickness is set to 1. Slide the knob to the right to increase the line’s thickness.
  • Type of plot is set to Line. Please keep this setting.
  • The last option allows you to display a horizontal line that helps you track its current level in the chart. Tick the Price Line checkbox to enable this feature.

Precision

This determines the number of decimal places the indicator uses to display the current value of its lines. You can adjust this by choosing from a drop-down list.

Scale

You can choose either Pin to Right or Pin to Left.

  • Pin to Right is the default option. This displays the indicator labels at the right-hand side of the indicator.
  • Pin to Left displays the indicator labels at the left-hand side of the indicator.