This technical indicator is designed to provide traders with a synthesized view of the US Dollar's strength by aggregating data from several major global currency pairs. Instead of looking at a single currency in isolation, the script creates a custom "composite index" that reflects the overall movement of the USD across various markets simultaneously.
How the Logic Works
1. Multi-Currency Data Aggregation The tool monitors six specific currency pairs involving the US Dollar: EUR/USD, USD/JPY, GBP/USD, USD/CAD, USD/SEK, and USD/CHF. By looking at these pairs together, the indicator captures a broader picture of how the dollar is performing against diverse economies (the Eurozone, Japan, the UK, Canada, Sweden, and Switzerland).
2. The Weighted Synthesis (The "USDx" Calculation) Rather than simply averaging these prices—which would be inaccurate because different currencies have different values—the script applies a specific mathematical formula to each pair. Each currency is assigned a unique weight (an exponent) that influences the final result. This ensures that the movements of some currencies impact the final "USDx" value more significantly than others, creating a balanced and specialized index of dollar strength.
3. Visual Representation The indicator displays this information in two distinct ways on your chart:
- The Histogram (Red): This represents the raw calculated value of the USDx index for each point in time. It allows you to see the immediate, direct fluctuations of the weighted currency index.
- The Trend Line (Green): The script takes that raw data and applies a "Moving Average." This smooths out the minor market noise and short-term volatility, making it easier for a trader to identify the primary trend—showing whether the dollar is gaining or losing strength over a sustained period.
Summary for the Trader
Think of this tool as a "Weather Map" for the US Dollar. While a single currency pair might show a brief, localized storm (volatility), this indicator looks at the entire atmosphere. It combines multiple global data points into one unified score, smoothing out the distractions to show you the overarching direction of the dollar's value.
//+------------------------------------------------------------------+
//| USDx.mq4 |
//| Copyright © 2009, EADeveloper |
//| mailto:forex.trading@gmx.at |
//+------------------------------------------------------------------+
#property copyright "Copyright © 2009, EADeveloper"
#property link "mailto:forex.trading@gmx.at"
#property indicator_separate_window
#property indicator_buffers 2
#property indicator_color1 Red
#property indicator_color2 Green
extern int MA=12;
double ExtMapBuffer1[];
double ExtMapBuffer2[];
//+------------------------------------------------------------------+
//| Custom indicator initialization function |
//+------------------------------------------------------------------+
int init()
{
//---- indicators
IndicatorBuffers(2);
SetIndexBuffer(0,ExtMapBuffer1);
SetIndexStyle(0,DRAW_HISTOGRAM,0,1);
SetIndexBuffer(1,ExtMapBuffer2);
SetIndexStyle(1,DRAW_LINE,0,1);
//----
return(0);
}
//+------------------------------------------------------------------+
//| Custom indicator deinitialization function |
//+------------------------------------------------------------------+
int deinit()
{
//----
//----
return(0);
}
//+------------------------------------------------------------------+
//| Custom indicator iteration function |
//+------------------------------------------------------------------+
int start()
{
int counted_bars = IndicatorCounted();
int i, limit;
if(counted_bars == 0)
limit = Bars - 30;
if(counted_bars > 0)
limit = Bars - counted_bars;
for(i = limit; i >= 0; i--)
{
double Open_EURUSD=iOpen("EURUSD",0,i);
double Open_USDJPY=iOpen("USDJPY",0,i);
double Open_GBPUSD=iOpen("GBPUSD",0,i);
double Open_USDCAD=iOpen("USDCAD",0,i);
double Open_USDSEK=iOpen("USDSEK",0,i);
double Open_USDCHF=iOpen("USDCHF",0,i);
double USDx=50.14348112 * MathPow(Open_EURUSD, -0.576) * MathPow(Open_USDJPY, 0.136) * MathPow(Open_GBPUSD, -0.119) * MathPow(Open_USDCAD, 0.091) * MathPow(Open_USDSEK, 0.042) * MathPow(Open_USDCHF, 0.036);
ExtMapBuffer1[i] = USDx;
}
for(i = limit; i >= 0; i--)
{
double r = iMAOnArray(ExtMapBuffer1,0,MA,0,MODE_SMA,i) ;
ExtMapBuffer2[i]=r;
}
//*
//----
return(0);
}
//+------------------------------------------------------------------+
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