One of the benefits of seasonal trading is that it allows you to spot big market themes early on. Here is a good example of how to spot and use those themes in your trading.
Towards the end of the year, the Dollar Index tends to have a period of seasonal weakness. You can see that over the last 51 years the dollar index has fallen 37 times and only gained 14 times. Part of the reason for the USD weakness at this time of year is accounting reasons as USD is sent away from parent companies to their daughter companies for year-end accounting. The USD tends to rapidly gain at the start of the year as these flows are reversed.
Knowing this seasonal pattern is there can be very helpful. Notice how it impacts the major currency pairs like the AUDUSD, NZDUSD, and EURUSD.
Major Trade Risks: The major risks are from fundamental reasons for USD strength which can negate the usual seasonal pattern.
HYCM clients can access the Seasonax product in order to analyse over 25,000 currency pairs, indices, commodities, as well as individual stocks. Please contact your account manager for a free trial. Certain products & services mentioned herein may or may not be available to all clients depending on which HYCM Capital Markets Group entity their trading account(s) adheres to.