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How to trade seasonal patterns in Forex, today: the AUD/CHF

November 27, 2019 11:30

Today our focus will be on quite an exotic currency pair, the AUD/CHF.

Even though we know the window before Christmas to be more than likely bullish, indicating that a "risk-measure" currency pair like the AUD/CHF should be expected to solidly perform during the weeks before Christmas, the AUD/CHF has, in fact, developed a bearish tendency in those weeks.

The seasonal bearish pattern has developed over the last 24 years, during the time span between November 29 and December 17, and delivers a chance for us to formulate a strategy to trade the AUD/CHF here.

The Seasonal Pattern in the AUD/CHF

The key parameter of this seasonal bearish pattern is: between November 29 and December 17, the AUD/CHF saw an average drop of 166 pips for 18 of the past 24 years.

In the remaining six years, it gained on average only 74 pips, while the maximum loss was 151 pips and the maximum drawdown being 171 pips.

Trade the Seasonal Pattern: AUD/CHF

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

Here's the plan:

  1. After identifying the profitable seasonal window, sell the AUD/CHF on the closing price of the starting date on November 29 (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 December 17.

    Looking at current market data, since the ATR(14) in the AUD/CHF on a daily time frame is currently trading around 42 pips and the maximum loss of the window being 151 pips, our worst-case stop will be placed based on the ATR(14) 150 pips away from our entry price.

    Meanwhile, the average gain of the seasonal pattern is 166 pips within this period. So, after entering the trade on the closing price of November 29, we would subtract 166 pips to get our take profit level.

Source: Admiral Markets MT5 with MT5-SE Add-on AUD/CHF Daily chart (between August 8, 2018, to November 22, 2019). Accessed: November 22, 2019, at 21:30 GMT - Please note: Past performance is not a reliable indicator of future results, or future performance.

In 2014, the value of the AUD/CHF increased by 2.0%, in 2015, it decreased by 10.2%, in 2016, it increased by 0.8%, in 2017, it increased by 3.3%, in 2018, it decreased by 8.9%, meaning that after five years, it was down by 13.1%.

Check out Admiral Markets' most competitive conditions on the AUD/CHF and start trading from as low as 3 ticks only. To test Admiral Markets AUD/CHF 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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