STEP 1: PAIR NORMALIZATION
All currency pairs are converted to standard FX market convention (e.g., JPY/NZD → NZD/JPY SHORT). Direction is determined by currency strength hierarchy: EUR > GBP > AUD > NZD > USD > CAD > CHF > JPY.

STEP 2: STRENGTH SCORING
Macro Score: Sum of fundamental factors (growth, inflation, central bank policy, rate differentials) per currency.
Total Score = Macro × 0.6 + Positioning × 0.4
Score Δ (difference between base and quote) measures the strength spread between the two currencies.

STEP 3: COT & OI ANALYSIS
COT Z-Score: Measures non-commercial positioning extremes on a rolling 156-week window.
OI Score: Confirms or diverges from price action based on open interest trends.
Composite positioning score ranges from −4 (extreme short) to +4 (extreme long).

STEP 4: CONVICTION CALCULATION
Conviction = (Score Δ + Momentum Δ × 1.5 + Carry Factor + Risk Alignment + Divergence Bonus) × 7
Range: 0–100. HIGH ≥70 (requires Δ≥8), MEDIUM ≥55 (requires Δ≥5), SPECULATIVE ≥35 (requires Δ≥3).
Ranked by conviction score, not opportunity score. Top 6 valid trades shown.

STEP 5: TREND ALIGNMENT FILTER
Uses 90 days of daily FX data (50-day & 20-day SMAs). Pair trend must align with trade direction:
• ALIGNED: Pair trend supports the trade direction (+2 risk alignment).
• CONFLICT: Pair trend opposes trade (0 adjustment).
• STRONG CONFLICT: BLOCKS trade unless valid reversal conditions met (−3 alignment penalty).

STEP 6: TRADE TYPE CLASSIFICATION
CONTINUATION: Macro aligns with trend, momentum supports, positioning is clean.
REVERSAL: Macro opposes trend BUT COT is extreme AND momentum is already shifting — only valid when both conditions met.

STEP 7: DURATION CLASSIFICATION
Duration Score = (Driver Persistence × 0.4) + (Momentum × 0.3) + (OI Confirmation × 0.2) + (Position Cleanliness × 0.1)
SHORT TERM (<45): Flow-driven, positioning unwinds, tactical window of days–weeks.
MEDIUM TERM (46–70): Macro or hybrid drivers, 2–8 week setup.
LONG TERM (≥71): Structural carry or policy divergence, multi-month horizon.

STEP 8: RANKING METRIC
Trades ranked by Conviction score (highest to lowest). Top 6 non-blocked ideas shown.
Carry column shows net bps income/cost. Momentum Edge reflects fundamental momentum divergence (-2 to +2 per currency).

TRADE VALIDITY & BLOCKING
A trade is shown when:
✓ Score Δ ≥ 5.0 (minimum strength divergence, raised from 3.0)
✓ Conviction ≥ 35 (speculative), ≥ 55 (medium), ≥ 70 (high)
✓ Does NOT conflict with STRONG trend (unless valid reversal)

A trade is BLOCKED if: pair is in STRONG opposing trend AND reversal conditions are not met (no COT extreme or no momentum shift).