FX Index Curve Oscillator (FICO)

By constructing an index like DXY for each of the 8 major currencies, we can determine which currencies may be showing relative strength or weakness. This indicator was designed for trading FX on the daily charts. Other timeframes should work with the right settings, but it will not work for other asset types.

• AUD - Yellow
  
• CAD - Red
  
• CHF - Orange
  
• EUR - Purple
  
• GBP - Green
  
• JPY - White
  
• NZD - Lime green
  
• USD - Blue
  

The US Dollar Index is constructed by taking a weighted average of a basket of currencies against the USD in order to gauge it's relative strength. We can actually construct a similar chart by simply taking the product of several currencies against the USD; it won't have the same values of course, but the chart's general shape (peaks and valleys) are approximately the same. This technique can be applied to other currencies, which is the premise of this indicator.

The default settings seem to work "okay" for the daily chart. The lookback and oscillator are probably the biggest variables to change if you move to different timeframes.

Some ideas on how to use this indicator:

Using crossovers for a particular currency pair:


Using color changes for a currency pair (one bright, one dark):


Waiting for values to cross +/- 1.000 and change color:


As above, but using all the currency indexes, and finding opposing pairs to trade: