Forex trading seasonality

By:

James Knight

James is a lead editor for Invezz, where he covers topics from across the financial world, from the stock market, to cryptocurrency, to macroeconomic markets. His ... read more.

Updated: Oct 12, 2022

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EURUSD and Euro Futures Seasonality- Best Times of Year to Buy and Sell

Normally we look at charts in chronological order, day after day, week after week, and year after year. These typical chart types show the price path of a currency over the years and provide a lot of information for technicians to use. Yet there is another way to view currency charts, and that is to look at them in a seasonal fashion.

A seasonal chart shows the tendencies of an asset to move higher or lower, or peak and bottom, at certain times of the year.

Instead of looking at the last 15 years of currency data in chronological order, what if you took each one year period, January to December, and printed it on a transparent slide. Then, put each year on top of each other. Doing this would highlight any period of the year which tend to be strong or weak. Luckily, we don’t need to do that. We can just take an average of the last 15 or 20 years to show what tends to occur at different times of the year (also see S&P 500 Seasonal Trends).

Below we look at the pattern of Euro FX futures which will also aid in trading the EURUSD forex pair.

Euro Seasonal Patterns

The Euro has seasonal tendencies, and we can see them by looking at the following seasonal chart of Euro futures, which are traded relative to the USD.

The chart shows the tendencies of the Euro over the last 15 and 20 years.

• The Euro typically forms a bottom in late February and then moves higher into mid-March.
• A pullback occurs, then we see another climb into the end of April.
• Another low in late May with an upward tendency into mid-June.
• Between mid-June and early July there is a choppy tendency to the downside.
• Upward tendency from early July to early August.
• Usually a decline from early August to early September.
• Starting in early September is a good time for the Euro heading into mid-October.
• Mid-October through late November is typically a bearish time.
• Bias toward the upside late in the year.

The chart below provides a more general guideline of which months tend to be good or poor for the EURUSD. As noted above, some pretty big moves start early, in the middle, or late in a month, so the prior chart is more detailed in that regard.

The chart below provides other information though. The number on the top of the column shows how often (%) the price moved higher in that month over the last 20 years. The number at the bottom of the column gives the average percentage rise or decline.

While this chart is a more general version of the chart above, it essentially shows the same data, just in a different way.

Things To Be Aware of With EURUSD Seasonality

Seasonality is not a tool to be used on its own, but rather should be combined with current price analysis to determine entry and exit points.

Seasonality provides us with windows of time where we can watch for trend reversals and feel more confident if we see a corresponding price pattern during the seasonal windows provides above. We may also feel more confident riding a trend that aligns with the seasonal patterns.

It is important to keep the overall trend of the current market in mind. In uptrends use seasonal low points to buy. In overall downtrends use seasonal high points to get short or to sell. Don’t fight a current trend just because the seasonal pattern says the price should be going the other way. As can be seen from the second chart, most months are only slightly favored to move one way or the other.

No matter what the seasonal tendency is, always manage risk. In any given year the price can deviate from the tendency, resulting in large losses if you trust the historical data blindly. Use stop loss orders and control position size to manage risk.

Using seasonality is not a requirement for successful trading, it is simply a tool that swing traders may opt to use if they feel it helps them.

GBPUSD and British Pound Futures Seasonality – Best Times of Year to Buy and Sell

Learn the times of the year when the GBPUSD and British Pound FX futures tend to do well and poorly, based on historical tendency.

Normally we view charts in chronological order, day after day and year after year. This chart type shows the price path of a currency over time and provide a lot of information for technicians to use.

There’s another way to view currency charts, and that’s to look at them in terms of seasonality.

A seasonal chart shows the tendencies of an asset to move higher or lower, or peak and bottom, at certain times of the year.

Instead of looking at the last 15 years of currency data in chronological order, what if you took each one year period, January to December, and printed it on a transparent slide. Then, put each year on top of each other. Doing this would highlight any period of the year which tends to be strong or weak. Luckily, we don’t need to do that. We can take an average of the last 15 or 20 years to show what tends to occur at different times of the year (also see S&P 500 Seasonal Trends).

Below we look at the pattern of British Pound FX futures which will also aid in trading the GBPUSD forex pair.

British Pound Seasonal Patterns

The British Pound has seasonal tendencies, and we can see them by looking at the following seasonal chart of Pound futures, which are traded relative to the USD.

The chart shows the tendencies of the Pound over the last 15 and 40 years. Since the statistics are being calculated over different lengths of time, there are some discrepancies. The longer-term calculation (40) contains more data, while the shorter-term statistic (15) shows what has been happening more recently.

• Over the last 40 years, the GBP is weak from the start of the year until early March. Over the last 15 years, January has had a slight upward bias, but February is still weak.
• In early March the GBP typically bottoms and rises throughout March and April, forming a peak in late April to early May.
• Over the last 40 years, May is a bearish month, while June meanders. Over the last 15 years, May is still weak, but the first part of June has been strong and the second half of June is weak.
• Starting in June, the price action is fairly indecisive through to the end of the year.
• From early July into late July or early August the GBP tends to push higher.
• August tends to be weak.
• In early to mid-October there is an upward bias into the start of November.
• Most of November tends to be weak, but turns higher late in the month.
• December is weak through the first half of the month, but over the last 15 years has shown a tendency to push higher in the last half of the month.

The chart below provides a more general guideline of which months tend to be good or poor for the GBPUSD. As noted above, some pretty big moves start early, in the middle, or late in a month, so the prior chart is more detailed in that regard.

The chart below provides other information. The number on the top of the column shows how often (%) the price moved higher in that month over the last 20 years. The number at the bottom of the column gives the average percentage rise or decline.

While this chart is a more general version of the chart above, it essentially shows the same data, just in a different way.

Things To Be Aware of With GBPUSD Seasonality

Seasonality is not a tool to be used on its own, but rather should be combined with current price analysis to determine entry and exit points.

Seasonality provides us with windows of time where we can watch for trend reversals and feel more confident if we see a corresponding price pattern during the seasonal windows discussed above. For example, we may also feel more confident riding a trend that aligns with the seasonal patterns.

It is important to keep the overall trend of the current market in mind. In uptrends use seasonal low points to buy. In overall downtrends use seasonal high points to get short or to sell….assuming there is a valid trade signal. Don’t fight a current trend just because the seasonal pattern says the price should be going the other way. As can be seen from the second chart, most months are only slightly favored to move one way or the other.

No matter what the seasonal tendency is, always manage risk. In any given year the price can deviate from the tendency, resulting in large losses if you trust the historical data blindly. Use stop loss orders and control position size to manage risk.

Using seasonality is not a requirement for successful trading, it is simply a tool that swing traders may opt to use if they feel it helps them.

USDCAD and Canadian Dollar Futures Seasonality – Best Times of Year to Buy and Sell

Learn the times of the year when the USDCAD and Canadian Dollar FX futures tend to do well and poorly, based on historical tendency.

This is done by looking at seasonality. A seasonal chart shows the tendencies of an asset to move higher or lower, or peak and bottom, at certain times of the year.

Instead of looking at the last 15 years of currency data in chronological order, what if you took each one year period, January to December, and printed it on a transparent slide. Then, put each year on top of each other. Doing this would highlight any period of the year that tends to be strong or weak. Luckily, we don’t need to do that. We can just take an average of the last 15 or 20 years to show what tends to occur at different times of the year (also see Stock Market (S&P 500) Seasonal Trends).

Below we look at the seasonality of Canadian Dollar FX futures, which will also aid in trading the USDCAD forex pair. CAD Dollar futures show the movement of the CADUSD, not the USDCAD. There is a difference. Whatever tendencies we find in the CAD Dollar futures (CADUSD), it will be the exact opposite for the USDCAD.

Canadian Dollar Seasonal Patterns

The Canadian Dollar has seasonal tendencies, and we can see them by looking at the following seasonal chart of CAD Dollar futures, which are traded relative to the USD.

The chart shows the tendencies of the CAD over the last 15 and 40 years.

• January is a poor month for the CAD, as it tends to decline.
• Over the last 40 years, late January to early February is strong, but quickly gives way to more weakness through February and most of March.
• In early March the CAD starts to bottom and rises until the start of May. Over the last 15 years, that rally has been starting earlier, in February.
• Early May the CAD peaks and declines most of the month.
• In late May the price bottoms again and rallies into mid-June.
• Mid-June is weak.
• Late June to mid-July is typically strong. Over the last 15 years, the strength has continued right into mid-September. Over the longer-term, mid-July to mid-August is a flat to weak period.
• The CAD peaks in September and then declines into mid-December.
• In mid-December, the CAD has a brief rally into the end of the year.

The chart below provides a more general guideline of which months tend to be good and poor for the CADUSD. As noted above, some pretty big moves start early, in the middle, or late in a month, so the prior chart is more detailed in that regard. The chart below also only looks at the last 20 years, where the chart above looks at 40 years, which leads to some slight discrepancies.

The number on the top of the column shows how often (%) the price moved higher in that month over the last 20 years. The number at the bottom of the column gives the average percentage rise or decline. This is the graph to use if looking at trading Canadian Dollar futures or the CADUSD.

While the chart above is a more general version of the first chart, it essentially shows the same data, just in a different way.

On the USDCAD graph below, all the numbers are reversed (there may be rounding errors). This is the graph to consider if trading the USDCAD currency pair.

Things To Be Aware of With USDCAD Seasonality

Don’t use seasonality on its own, rather, combine it with current price analysis to determine entry and exit points.

Seasonality gives us windows of time where we can watch for trend reversals and feel more confident if we see a corresponding price pattern during the seasonal windows provides above. We may also feel more confident riding a trend that aligns with the seasonal patterns.

It is important to keep the overall trend of the current market in mind. In uptrends, use seasonal low points to buy. In overall downtrends, use seasonal high points to get short or to sell. Don’t fight a current trend just because the seasonal pattern says the price should be going the other way. As can be seen from the second chart, most months are only slightly favored to move one way or the other.

No matter what the seasonal tendency is, always manage risk. In any given year the price can deviate from the tendency, resulting in large losses if you trust the historical data blindly. Use stop loss orders and control position size to manage risk.

Using seasonality is not a requirement for successful trading, it is simply a tool that swing traders may opt to use if they feel it helps them.

USDJPY and Yen Futures Seasonality– Best Times of Year to Buy and Sell

Learn the times of the year when the USDJPY and Yen FX futures tend to do well and poorly, based on historical tendency.

Typically, most of us look at charts in chronological order, where the price is shown day after day, week after week, and year after year. These typical chart types show the price path of a currency over the years and provide a lot of information traders use. Yet we can also look at charts in a seasonal fashion.

A seasonal chart shows the tendencies of an asset to move higher or lower, or peak and bottom, at certain times of the year.

Instead of looking at the last 15 years of currency data in chronological order, what if you took each one year period, January to December, and printed it on a transparent slide. Then, put each year on top of each other. Doing this would highlight any period of the year that tends to be strong or weak. Luckily, we don’t need to do that. We can just take an average of the last 15 or 20 years to show what tends to occur at different times of the year (also see Stock Market (S&P 500) Seasonal Trends).

Below we look at the seasonality of Yen FX futures which will also aid in trading the USDJPY forex pair. Yen futures show the movment of the JPYUSD, not the USDJPY. There is a difference. Whatever tendencies we find in the Yen futures (JPYUSD), it will be the exact opposite for the USDJPY.

Yen Seasonal Patterns

The Yen has seasonal tendencies, and we can see them by looking at the following seasonal chart of Yen futures, which are traded relative to the USD.

The chart shows the tendencies of the Yen over the last 15 and 40 years.

• Over the last 40 years, January to the end of February has been bearish for the Yen. More recently, over the last 15 years, the first half of January has been somewhat strong, but February is still weak.
• The first half of March tends to bullish for the Yen. But the last half is weak.
• From early April to early May there is an upward bias.
• May typically sees the Yen decline.
• The first half of June is often choppy, but has an upward bias by mid-June.
• July is a sideways period, but an upward bias typically kicks in by late July or early August.
• Early August through to mid-October is an upward period for the Yen.
• By mid- to late October the Yen is usually peaking and starting a decline into mid-December.
• There has been a slight upward bias in mid-December, but the rally is typically short-lived.

The chart below provides a more general guideline of which months tend to be good or poor for the JPY USD. As noted above, some pretty big moves start early, in the middle, or late in a month, so the prior chart is more detailed in that regard. The chart below also only looks at the last 20 years, where the chart above looks at 40 years, which leads to some slight discrepancies.

The number on the top of the column shows how often (%) the price moved higher in that month over the last 20 years. The number at the bottom of the column gives the average percentage rise or decline. This is the graph to use if looking at trading Yen futures or the JPYUSD.

While this chart is a more general version of the first chart, it essentially shows the same data, just in a different way.

On the USDJPY graph below, all the numbers have been reversed (there may be slight rounding errors). This is the graph to consider if trading the USDJPY currency pair.

Things To Be Aware of With USDJPY Seasonality

Don’t use seasonality on its own, rather, combine it with current price analysis to determine entry and exit points.

Seasonality gives us windows of time where we can watch for trend reversals and feel more confident if we see a corresponding price pattern during the seasonal windows provides above. We may also feel more confident riding a trend that aligns with the seasonal patterns.

It is important to keep the overall trend of the current market in mind. In uptrends, use seasonal low points to buy. In overall downtrends, use seasonal high points to get short or to sell. Don’t fight a current trend just because the seasonal pattern says the price should be going the other way. As can be seen from the second chart, most months are only slightly favored to move one way or the other.

No matter what the seasonal tendency is, always manage risk. In any given year the price can deviate from the tendency, resulting in large losses if you trust the historical data blindly. Use stop loss orders and control position size to manage risk.

Using seasonality is not a requirement for successful trading, it is simply a tool that swing traders may opt to use if they feel it helps them.