Power of USD VertexFX Indicator

OmSaiTech

Active Trader
Aug 8, 2015
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Power of USD is a VertexFX indicator that calculates

the strength of the US Dollar (USD) with respect to

major USD forex pairs. It should be traded on USD

based pairs, namely - AUDUSD, EURUSD, GBPUSD,

NZDUSD, USDCAD, USDCHF, and USDJPY.

The US Dollar accounts for nearly 80% of the world’s

currency transactions and therefore forex traders

rely on trends in various USD-based forex pairs to

gain insights into the strength of the US Dollar.

The PowerOfUSD indicator calculates the equal-

weighted strength of USD from the seven major USD

pairs. The formula of Power of USD is listed below:

PowerUSD = (USDCAD + USDCHF + USDJPY / 100.0 –

AUDUSD – EURUSD – GBPUSD -NZDUSD) / 7

Currencies that are denominated in USD are

subtracted from currencies where USD is the base

currency. When the USD exhibits strength, the Power

of USD indicator falls, whereas when the USD

exhibits weakness it rises. It should be noted that

the value of USDJPY is divided by 100 to adjust for

the base value of Yen.

When USD becomes strong, the value of AUDUSD,

EURUSD, GBPUSD, and NZDUSD fall – because a lesser

quantity of USD can be purchased with these

currencies. At the same time, the value of USDCAD,

USDCHF, and USDJPY rises because more quantities of

CAD, CHF, and JPY can be purchased respectively

using USD. When the net effect result, which is the

Power of USD indicator value is falling, it implies

a strong and confirmed rise in the USD.

This indicator should be used only on USD based

pairs, namely, EURUSD, AUDUSD, GBPUSD, NZDUSD,

USDCHF, USDCAD, and USDJPY. Signals generated for

USD denominated pairs, namely AUDUSD, EURUSD,

GBPUSD, and NZDUSD should be reversed for non-USD

denominated pairs, namely, USDCAD, USDCHF, and

USDJPY.

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