Seasonal fluctuations in Forex

We continue the theme of seasonal changes in financial markets and in particular in Forex. In the first part, we examined what reasons can cause periodic fluctuations in quotations, on which you can predictably earn, and now we will take a closer look at where to get the necessary information and how to apply it in the trading process.

Seasonal changes are more dependent on fundamental factors, but they need to be worked out using technical tools.

Which of them will be optimal in a specific market situation, you will learn from the free basic strategy course “Sniper X”.

Seasonal change services

Seasonal change services

As in the case of signals calculated from technical analysis, seasonal forecasts operate on past data if we mean cycles that last at least a month. On one “side” there are services that process historical periods using mathematical methods. Their goal is to reveal hidden patterns, but the value of such predictions is no better than Elliott Wave Theory.

The opposite is made up of large players operating with a large number of fundamental factors. As much information is used, even such as the number of crude oil tankers currently in the ocean (Bloomberg data). Naturally, this requires a large staff of analysts and experience.

The truth, as always, is somewhere in between and even an ordinary trader can find a service that is optimal in terms of price / quality ratio, for example, used in the examples of

Purchase period (BUY) 

We act as follows:

  • the starting point for the analysis will be the closing price , which will be the balance sheet level. We will look for shopping opportunities from him.
  • then put down the average size of the drawdown, in our case it is 559 pips or 55-56 points for four-digit quotes. This makes it possible, firstly, to see the zone of possible rollback, in which it is more profitable to enter than just at the balance level, and, secondly, to estimate the maximum loss level if the price goes to SELL;
  • accordingly, the calculated Take Profit will be at the level of the average profit (1475.33 pips or 147-148 points). As you can see, the deal closes in profit quickly enough and it is better to stay out of the market until the end of the cycle.

We always look at additional confirming instruments, for example, “Moving Averages and MACD”. It is great if there is a divergence or a sharp increase in volumes at the very beginning before the beginning of the cycle.

Sales period (SELL) 

We considered the development of the previous cycle “after the fact”, and now let’s imagine that a trader starts trading, i.e. the future (highlighted in the figure) part of the chart is not visible to him, and it may be necessary to close the deal next year. It seems that the risk is too great, but let’s trust the service and open the sale. We will not build a zone of possible rollback and target profit, but we mean their presence.

The result was again positive – the price went down for almost 10 hours. It is quite possible to earn using a trailing stop, although the calculated TakeProfit level was not reached, and the price went up contrary to the forecast. Any prediction cannot be 100% accurate, but the initial impulse turned out to be correct.