How to Take Advantage of the Seasons When Choosing a Currency Pair

Forex traders typically rely on intraday charts, such as 15-minute, 5-minute, 2-minute, or 1-minute charts for trade entries. However, one factor that is often overlooked, yet can increase your chance of success in trades, is the season in which the trade is executed. By understanding seasonal trading and the impact of seasons on currency pairs, you can enhance your portfolio with another winning strategy and improve your trading success rate.

Seasonal Trading

While most people view charts chronologically, observing them seasonally is another effective approach. This technique, also known as Forex seasonal charts or patterns, is based on the premise that currency market movements follow specific patterns throughout the year. Traders collect years of data to identify trends and pinpoint expected highs and lows for currency pairs at certain times of the year. Incorporating seasonality into your Forex strategy presents an opportunity to enhance your profits.

Seasonal Patterns in EUR and USD

When trading the EUR/USD currency pair, observing seasonal patterns is particularly effective. For example, futures for this pair often indicate either steady movement or decline. This means traders may anticipate predictable turning points during certain times of the year, such as a rise in EUR/USD after a drop in February, and relative steadiness between EUR/USD throughout April, followed by a downward trend from August until the end of September.

However, it’s important to note that while seasonality can be a valuable tool, it should never be relied on exclusively. Rather, traders should use seasonality as a means of complementing their technical analysis.

Written by Luis Nieves

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