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How to trade seasonal patterns in Forex, today: EUR/PLN

June 26, 2019 12:00

Today, we want to look at a, at first glance, very exotic currency pair: EUR/PLN. Even though the currency pair looks very exotic, after the latest developments around the ECB and in combination with a highly profitable seasonal pattern which occurred over the last 17 years, the currency pair is definitely worth a deeper look.

On June 18, ECB president Draghi made further monetary stimulus from the ECB a topic at a speech in Sintra/Portugal which resulted in a sharp shift in the markets implied the probability of an ECB rate cut by September from initially 40% on Monday to 87% last Tuesday.

That said, there seems an obvious willingness from the ECB to try to down-talk the European currency.

But how can we trade this, especially an exotic currency pair like the EUR/PLN?

Here, a bearish seasonal pattern comes into play which developed over the last 17 years during the time span between June 28 and July 4.


Seasonal Pattern in the EUR/PLN

The key parameter of this seasonal bearish pattern looks as follows: between June 28 and July 04, EUR/PLN saw an average drop of 49 pips for 14 of the past 17 years.

In the remaining three years, it gained on average only 23 pips, while the maximum gain was 33 pips and the maximum drawdown 36 pips.


Trade the Seasonal Pattern: EUR/PLN

And now the key question: how could we trade this?

Here's the plan:

  1. After identifying the profitable seasonal window, sell EUR/PLN on the closing price of the starting date on June 28 (22:59 CET).
  2. Identify the maximum loss within the seasonal period. Then, have a look at the daily chart and the ATR(14) indicator

    >If the maximum loss is above the ATR(14) reading, round it up to the next round number and use it as worst-case-stop.
    >If the maximum loss is below the ATR(14) reading, use the ATR(14) as your stop-width (rounded up to the next round number).
  3. Look at the average gain of the seasonal pattern, and place the take profit at this distance from your entry point.
  4. If the trade is not stopped out or it does not reach its take profit within the seasonal period, end the trade market on the closing price on July 04.

Looking at current market data, since the ATR(14) in EUR/PLN on a daily time frame is currently trading around 110 pips, while the maximum loss/drawdown of the window was 33 respectively 36 pips, our worst-case stop will be placed based on the ATR(14) 110 pips away from our entry price.

Meanwhile, the average gain of the seasonal pattern is 49 pips within this period. So, after entering the trade on the closing price of June 28, we would subtract 49 pips to get our take profit level.

Source: Admiral Markets MT5 with MT5-SE Add-on EUR/PLN Daily chart (between March 21, 2018, to June 20, 2019). Accessed: June 20, 2019, at 14:00 GMT - Please note: Past performance is not a reliable indicator of future results, or future performance.

In 2014, the value of EUR/PLN increased by 3.3%, in 2015, it decreased by 0.5%, in 2016 it increased by 3.2%, in 2017 it decreased by 5%, in 2018, it increased by 2.7%, meaning that after five years, it was up by 3.4%.

Check out Admiral Markets' most competitive conditions on EUR/PLN and start trading from as low as 0 pips. To test Admiral Markets EUR/PLN offering in combination with the described strategy above register for a free demo account today and experience the live market risk free!


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Disclaimer: The given data provides additional information regarding all analysis, estimates, prognosis, forecasts or other similar assessments or information (hereinafter "Analysis") published on the website of Admiral Markets. Before making any investment decisions please pay close attention to the following:

  1. This is a marketing communication. The analysis is published for informative purposes only and are in no way to be construed as investment advice or recommendation. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research, and that it is not subject to any prohibition on dealing ahead of the dissemination of investment research.
  2. Any investment decision is made by each client alone whereas Admiral Markets shall not be responsible for any loss or damage arising from any such decision, whether or not based on the Analysis.
  3. Each of the Analysis is prepared by an independent analyst (Jens Klatt, Professional Trader and Analyst, hereinafter "Author") based on the Author's personal estimations.
  4. To ensure that the interests of the clients would be protected and objectivity of the Analysis would not be damaged Admiral Markets has established relevant internal procedures for prevention and management of conflicts of interest.
  5. Whilst every reasonable effort is taken to ensure that all sources of the Analysis are reliable and that all information is presented, as much as possible, in an understandable, timely, precise and complete manner, Admiral Markets does not guarantee the accuracy or completeness of any information contained within the Analysis. The presented figures refer that refer to any past performance is not a reliable indicator of future results.
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