welcome back folks this is lesson 4.3 of the January 2017 ICT mentorship continuing our discussion on seasonal Tendencies we're going to be highlighting ideal seasonal Tendencies and higher time frame analysis this is going to be specifically dealing with foreign exchange or FX payers okay before we begin uh just a reminder that seasonal Tendencies are a tendency they're not a Panacea they're not a be all in all they're not a absolution they're just road maps of what has happened in the past with price action so when we look at these charts the orientation is for instance
for the Forex pair all the dollar the chart on the left is the Australian dollar Futures price seasonal tendency and the chart on the right US dollar Index seasonal tendency for the Futures price what I'm sharing with you the ideal seasonal Tendencies what we're actually looking at is we're comparing the two seasonal tendency charts we're looking for the most diametrically opposed price action between the two so when we're focusing on high probability or in my definition an ideal seasonal tendency is when the underlying Market is predisposed to go in a direction that c Zone tenancy
is being outlined in here so it doesn't mean every single year the seasonal tendency May may not come to fruition but that's okay it's a general rule of thumb there's plenty of these seasonal Tendencies as we go through the major pairs so there's something always every year that would set up a potential long-term trade you see here on the Australian dollar the strongest seasonal tenancy in contrast to that of the dollar Index on the right the Shaded in area here shows the strongest tendency for Australian dollar Futures prices to Rally in March and make a
top sometime in May now if this is true we should see a sell-off in the dollar Index and we do in fact see that same thing occurring between March and a decline making a low in May so between the two we have a qualified ideal scenario for the Australian US dollar pair in FX to Rally because it's the first currency in the name of the pair Australian dollar Aussie looks at the rally at time of year same time the dollar Index so the pair Construction in ways design when we watch price of Aussie dollar when
we see price rallying on that chart we're actually seeing the rise of Australian dollar futures or I'll show you in prices versus lower prices on the dollar Index so in an ideal scenario this trade would be best suited to be found on a long-term primary bullish Market or if we made a long-term low we could potentially test this theory in terms of catching a long-term trade okay our next pair we're going to look at is the New Zealand dollar or kiwi coupled with the dollar Index on the left hand side that's the New Zealand dollar
Futures Contract seasonal tendency and again on the right hand side it is the US dollar Index features seasonal tendency see here again just like we saw in the Australian dollar we can see a rally that's typical for a March April time period making a high in May for the New Zealand dollar Futures price and again if this is true we're going to see a contrasting sell-off at the same time of the year again we do see that May April High and a low forming in May now these are only focusing on the highest ideal long-term
setup I'm not looking for every possible scenario for a seasonal play but for long-term analysis we're focusing only on the most obvious ones that jump off the chart and they have historical data to support it and again because it's a tendency it doesn't mean it's going to happen every single year so the best scenario would be when you're in a bullish condition and you're seeing underlying bullishness for a New Zealand dollar this seasonal tendency should have an effect on price that time of year between March and April we should be seeing a seasonal low and
for a couple months you see a rally up into around May the next pair we're going to look at is the euro dollar or Fiber and we're going to be focusing on the left-hand chart for the Euro Futures price and then we're going to look at the chart on the right for the Futures price on the US dollar Index as you see here we have a seasonal load it usually forms between June and July and that should be seen with a high that forms in the dollar Index so as a long-term High time frame scenario
this is the ideal scenario you would look for a load of form in the summer of euro dollar okay next one we're looking at is the cable or British pound versus US dollar the chart on the left is the British pound Futures price and seasonal tendency and the dollar Index is on the right hand side seasonal tendency for the Futures price as well for the British pound we have the strongest tendency to make a low in March with a high forming in May and if this is true we would be seeing a high form between
March and April with a low forming in May and we do see that here so this is the highest probable or ideal scenario for seasonal Tendencies again not a Panacea or a BL Indo but it is a really good time to expect a bullish scenario at least for a long-term trade if the underlying market for the British pound is bullish so if you're studying the Futures price of the British pound or if you're just watching the pound dollar FX pair and on the higher time frame charts we're expecting to see higher prices were in the
long-term uptrend if we enter this time of year between March and April we would be expecting some seasonal low to form and we can see that actually is supported with Ace sell-off in the dollar seasonally as well I want to contrast also the difference between these blue and red lines on the chart on the left hand side that's the British pounds Futures seasonal tendency the Blue Line represents 40 Years of data and the red line represents 15 years of data so by contrasting that you have a lot of time factored into these tendencies so it's
to me in my opinion this is a really strong one because it's many years worth of data and it's also contrasting it with a smaller short-term view of the marketplace where in the last 15 years it was there and in the last 40 years it was still there so between March and April there's usually a seasonal load of the forums and then it rallies up to making a spring high around May and again it's really really uh positive and most likely expected to see happen when you have the underlying British pound in a strong uptrend
or you've suspected a turn has taken place long term and we haven't started trending up higher we can test this Theory by taking a trade and see if it does in fact pay now foreign X pair is the dollar swissy okay or US dollar versus Swiss franc dollar Index is on the left hand side it's a seasonal tendency for the Futures price of the dollar Index and on the right hand side it is the Futures chart seasonal tendency for the Swiss francaise so what we have on the dollar Index we have a seasonal tendency for
the dollar to make a seasonal High in the June July time period so summer highs forming in dollar Index and the contrasting low that forms in June July in the Swiss franc so we have a strong tendency for that to make a major turning point in the summer months for this particular pair and again this would be an ideal scenario where the dollar is in a bearish market uh primary downtrend or if we are in a primary option for the Swiss franc this will be a good scenario to trade this as well okay the dollar
versus Japanese Yen on the left hand side we have again the seasonal tendency for the Futures price for the dollar Index and then on the right we have the seasonal tenancy chart for the Futures price of the Japanese Yen strongest tendency on the dollar is to see a high form and a sell-off into May and the opposite is seen with a seasonal low forming in March in April and we see that that generally makes the long-term low for the Japanese Yen at that time across the calendar year foreign if we're looking at seasonal Tendencies again
the way you could trade this is if you are in a downtrend for the dollar Index this would be a really good one to sell dollar versus Japanese Yen or if you are in a bullish uptrend for the Japanese Yen this is a good time to sell short this currency pair because you'd be buying strength of the Japanese Yen while selling dollars okay our next pair is the dollar CAD or US dollar versus Canadian dollar on the left-hand side we have the dollar Index Futures seasonal tendency and on the right we have Canadian dollar Futures
seasonal tendency and for the dollar we have a strong tendency to create a high again in that March April time period McNiel low in May and we see the opposite is seen with the Canadian dollar making a low in March April and that high forming in May so the way you would use this seasonal tendency is if you're bearish on the dollar Index this is a good time to be selling short dollar CAD or if you're long-term bullish on Canadian dollar this is a good time to sell this pair because you can see the weakness
in the dollar Index and the strength underlying with the Canadian dollar so I went kind of like go back in summary with these seasonal tendencies just because we're looking at one seasonal tendency for instance when we're looking to the season seasonal Tendencies for the dollar Index uh when that occurs like for instance between March and April time period we expect the dollar Index to create some measure of a high long term seasonally it doesn't mean it's going to happen but we're expecting it to occur by itself it means that if we're primarily bearish on the
dollar Index this is an ideal scenario to be selling dollars now that may not be apparent in the dollar Index but if we see a pair or a currency that is coupled with a dollar that has a strong seasonal tendency to Rally in a specific time of the year like that March April time period like we're seeing here with the Canadian dollar that means we don't have to be in the uptrend for dollar Index we could be in a long-term consolidation but save the save the Canadian dollars in a bullish uptrend you're focusing in on
that time of year where March April creates a low in Canadian dollar and it rise up into May so with that seasonal tendency underlying strength for the Canadian dollar that also would sell off the dollar versus CAD pair so it's a it's a blending of the ideas it's not simply well it has to be the uh downtrend for the dollar and it has to be uptrend for the Canadian dollar you only really need one and by blending these two elements together and applying the seasonal tendency you're really focusing in on when seasonally the highest probability
for a big move is to occur you narrow it down to a specific time of the year certain calendar months and highest probability seasonal Tendencies so you can go through your calendar ahead of time and write down certain months where you want to be focusing on specific plays that may unfold in price it's real easy to forget about these seasonal Tendencies when you get caught up in the day trading and short-term trading and reading other stuff about ICT material but you want to have this stuff in your in your calendar on your trading desk there
should always be things to watch this month things to watch the coming month okay and these are the types of things you want to have in your notes so when you're working at your desk and you have your your your trade desk open you're looking for trades always start your trading day every single day with reviewing a macro perspective like this are we coming on a time period where there's a high probability for a sustainable move and it's seen by these types of seasonal tendencies very rarely do you have things that would line up or
give you clues that feature price should do certain things or have a rhythm to it like seasonal Tendencies and when we study these you're going to see that we're gonna go we're going to refer to these actually uh multiple times throughout the disciplines of trading we're going to use them again in swing trading and in short-term trading so we're not done with them because we're doing High time frame analysis but for higher time frame analysis these are scenarios you want to be focusing on specifically for these respective pairs so until we talk again I wish
you good luck and good Trading
