You will have heard of seasonal trends and they tend to start in the Spring and Autumn of the Northern Hemisphere, but what starts this trend?
Seasonal forex Trends.
It’s been very interesting this year, the Greek Cypriot crisis coming to a resolution and causing the EURUSD to trend back to the top of it’s long term range and back again to the bottom by mid July, where I suspect the Bernanke’s speech that had a bit of a dim view of the prospect for the economy produced a surge in the value of the EURUSD. The trend that was started at the resolution of the Greek-Cypriot crisis continued for 3 months until the middle of June, the next step was to take out the previous swing low in mid May to feed the market with the liquidity need to start the long term trend up, now lasting nearly 4 months. The start of these technical trends often coincide with some major economic events, and I suspect that the US situation will provide the basis for the next strong move. There is plenty of scope for the USD to weaken against the EUR, we have seen the EURUSD worth nearly 1.7000, and from the bottom of just under the long term support of 1.3000 we are only half way there.
The General Reasons For Forex Trends.
One of the main reasons for seasonal trends is the simple fact that there are more participants driving the market. The summer months in the Northern Hemisphere where most forex trading takes place are traditionally holiday months and forex traders are no different, they will generally be taking time off at the same time as everyone else. These months often see periods of very tight consolidation where you can see a range of not more than 200 PIPS on the EURUSD for weeks on end, except that range might be ambling in one direction more than the other. Then there are the Christmas Holidays, this translates into a quiet period totalling over a month, and thereafter a market with little movement until we come into March. Forex trading is a complex exercise and the best way to get an edge is to be aware of what the market might potentially do, so when there is some major news be aware of what time of year it, and will that coincide with a support or resistance level that will provide the fillip for the next turn of the market.