My is question is about the macro score

Question

I am the looking at GBPCHF in the forex opportunities section.  The opportunity suggests a potential long trade. But macro score suggests CHF is outpacing GBP.  The other indicators all show GBP as the stronger currency.  Just wondering if I can get clarity on how to interpret that.

Efrain Medrano · Accepted Answer

So for me GBPCHF has been going down for the past 3 weeks or so. The macro currency strength indicator is showing that both pairs are currently on the strong side. This would suggest that this pair will need more time for the macro agree with your analysis. For me the macro score always has to be on my side before I look at taking the trade. You have 7 things to be watching:

Macro Currency Strength Meter
GDP Differential Indicator
Trade Analysis (Imports/Exports)
Interest Rate Differentials
Domestic Stock Market Analysis
Hedge Fund Positioning
Price Trends

The don't have to all agree at the same time, you should have at least 4 out of 7 agreeing. But the macro strength should always agree with your analysis. Once you have the majority agreeing you go to your price trend.

That's my take but I would be curious to hear from the real pros 🙂

Marcus Raiyat · Answer

Nice summary and extra details from Matty.

To add to this:

- Also look at the international trade between the UK and Switzerland, and analyse the performance of the major exporting companies/ commodities of each...   after all, if they're performing badly, this is an important relative factor that needs to be considered.   Eventually, we'll have tech for this too... but for now, do it on excel OR go on to trading view, and compare the company/ commodity price vs the exchange rate and compare it visually.

Matthew Cheung · Answer

Great question Ernest, and Efrain really sound judgement.

All in all, GBPCHF could be a potential one in the future...  However as Efrain mentioned on a domestic level GBP (United Kingdom) is slowly weakening whereas CHF (Switzerland) has been showing opposite signs. If this macro trend continues it may be an early sign of the opposite conviction (potentially bearish). But... if in the next week or so GBP would look to strengthen and CHF weaken it may be a better sign. 
Since the opportunity ranking has a grey neutral circle this means they're both in the stronger macro region meaning both countries are showing signs of domestic growth.  What you'd want on a bullish outlook in an ideal circumstance is GBP showing positive macro strength and growing then CHF showing negative macro strength and weakening.  Hope this helps! (I'll make a video on this to help clarify a bit of analysis for everyone soon)

davoood63 · Answer

I had the similar issue with that GBP/CHF trade idea as at the time of posting, it looked like a reasonable trading idea so I opened a position and it fell like anything against me and then surprisingly the Macro score changed as well so I am really confused with that.. We have been taught in the videos that when we trigger, it should last for quite a long time.. 🤔

ernest Ianetti · Answer

I had almost that exact discussion with someone about seasonality charts yesterday.  Given the extreme impact COVID has had on virtually every country's economy and currency, it must have also skewed the expected seasonal swings to some extent.

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