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How to trade seasonal patterns in FX, today: the GBP/USD

August 07, 2019 11:00

Today, we want to look at a currently very interesting currency pair, GBP/USD. With Boris Johnson being the new UK prime minister, a no-deal-Brexit became a very real prospect and resulted in GBP dropping on a broad front, marking e.g. new yearly lows against the US dollar.

While some market participants see Johnson's tough stance toward the EU and in regards to the current Brexit deal, with the Irish backstop being the most thorny issue, as an attempt to get support from Nigel Farage's Brexit party should it come to a snap election, the clock is ticking with the Brexit deadline being the October 31.

The resulting uncertainty leaves Pound Sterling vulnerable to further losses. In addition to that, a seasonal bearish window opens between August 5-12, which developed over the last 24 years, putting the advantage in currency pair clearly on the short-side.


Seasonal Pattern in GBP/USD

The key parameter of this seasonal bearish pattern look as follows: between August 5 and August 12, GBP/USD saw an average drop of 206 pips for 18 of the past 24 years.

In the remaining six years, it gained on average only 101 pips, while the maximum loss and maximum drawdown were 352 pips.

Trade the Seasonal Pattern: GBP/USD

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

Here's the plan:

  1. After identifying the profitable seasonal window, sell GBPUSD on the closing price of the starting date on August 05 (22:59 CEST).
  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 August 12.

Looking at current market data, since the ATR(14) in the GBP/USD on a daily time frame is currently trading around 90 pips, while the maximum loss of the window was 352 pips, our worst-case stop will be placed based on maximum loss 350 pips away from our entry price.

Meanwhile, the average gain of the seasonal pattern is 206 pips within this period. So, after entering the trade on the closing price of August 5, we would subtract 210 pips ticks to get our take profit level.

Source: Admiral Markets MT5 with MT5-SE Add-on GBP/USD Daily chart (between April 27, 2018, to July 12, 2019). Accessed: July 12, 2019, at 07:00 GMT - Please note: Past performance is not a reliable indicator of future results, or future performance.

In 2014, the value of the GBP.USD fell by 5.9%, in 2015, it fell by 5.4%, in 2016, it fell by 16.3%, in 2017, it increased by 7.4%, in 2018, it fell by 5.6%, meaning that after five years, it was down by 22.9%.

Check out Admiral Markets' most competitive conditions on the GBP/USD and start trading from as low as 0 pips. To test Admiral Markets GBP/USD 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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  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.
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