welcome back folks this is lesson 4. 2 continuing our teaching on applying seasonal tendencies to higher time frame analysis okay we'll be highlighting our topic of seasonals with a deeper focus on fair seasonals and higher time frame analysis and our market of study for this teaching is going to be the new zealand dollar or kiwi okay and when we looked at lesson 4. 1 we we looked at the canadian dollar and we noticed that while the seasonal tendencies that i'm sharing here there's seasonal tendencies with the utilization of the futures market so since it's the futures market that we're using the seasonal tenancy it's important to understand that the seasonal tenancy may if it's bullish for the seasonal tendency chart for a particular time of year that may or may not be bullish for a particular pair like for instance in 4.
1 lesson we used that u. s cad pair and since the seasonal tendency is on the canadian dollar we are looking at a time when the canadian dollar seasonal tendency for the futures contract would be bullish in our seasonal tenancy but would be bearish in the u. s cad pair because it would be inverted that would be a little bit of a sticking point for someone that's just rushing through this lesson but we're going to talk about a currency this time where it's going to move basically in tandem with what you expect to see in the seasonal tenancy chart we're looking at the kiwi or the new zealand dollar which is a com dial commodity currency that means the currency is traded as a futures market this teaching also is going to go a little bit deeper in the understanding of seasonal tenants and how i employ them i've been able to call pretty significant price swings in the marketplace using hard time frame charts and many of them youtube have witnessed that happen some of you seen it in this mentorship all of it comes by way of the things i'm teaching in these two lessons here 4.
1 4. 2 the way we're going to approach the seasonal tendencies in this teaching is going to be applying bear seasonals but we're also going to segue into how this helps us get in sync with hopefully a quarterly shift in the marketplace which is the goal of position trading or long-term trading as i understand and teach it powerful moves that occur on these higher time frame charts monthly weekly and daily they're in the hundreds of pips for foreign exchange so it behooves you to look at this marketplace when these higher time frame charts because regardless of what type of trade you're going to be and if you can use seasonal tendencies like a road map it's literally like knowing the most probable direction certain times of the year for certain currencies or markets because it's not limited to just foreign exchange or currencies it's limited to nothing really i mean everything has a seasonal tendency but you have to study it and go through a long process of you know compiling all that data to get to the outcome what would highlight a seasonal tendency where it rests most predominantly if you're looking at this chart here obviously you can see that there are certain points in where price generally on the blue line and on the red line okay and it's comparing a long period blue line of time and a shorter period of data and when both of them move in tandem direction in other words they all are basically moving in the same direction up or down at any given particular time that highlights a high probability seasonal tendency now when it gets real muddy and it's choppy back and forth then it makes it a little bit less likely there's a seasonal tendency there but just quickly going over this chart here it should be obvious to you what time of year there is a significant decline in price expected and when should there be a significant increase in price for the kiwi dollar let's zoom in and take a closer look and we'll break this down into real specifics okay we have that same chart now just zoomed in and i want to highlight a few things going into this these seasonal tendencies while we're trying to aim at where the conditions lie that would set up a quarterly shift in other words a move that may take two to three months to unfold we're using these higher time frame charts with the attempt to hone in on an area where we can capture several hundred pips in a long-term position trade or looking for the ideas to get us in sync with the institutional mindset where the direction of the market should go in these higher time frame charts since it's the smart money entities that move price on these higher time frame charts we know there's a high probability if there's a certain time of year or a tendency for the market to rally or decline and it's shown itself over a large sample size of data the blue line in the kiwi here represents 19 years worth of data the red line represents 15 years worth of data and the only thing it's doing is contrasting for 15 years worth of data versus 19 years worth of data the seasonal tendencies pretty much are locked in tandem you can see pretty much it's the same scenario all the time because it's traded in march contracts june contracts september contracts and december contracts they are the futures contract delivery months in other words these are the months that you would be buying or selling if you're gonna be trading as you can see the june contract has the strongest tendency to rally and decline all in that same contract month beginning first trading day and last trading day before the contract would expire then december's contract has a very strong tendency to rally late in the year and understanding that it's pretty obvious that if you're going to be trading the kiwi you want to be focusing on the june contract and the december contract that's the powerful nature of understanding these seasonal tendencies that doesn't mean that the march contract won't see specific price action that sets up moves that we see in the june and december contract or that we won't see things in the september contract that would lead into december's contract month unfolding as we see here in the seasonal tenancy again they're not panaceas they're not be all end-alls but they're road maps as to what price has done in the past historically year after year by compiling the data we can see that these contract delivery months do this type of thing over a large sample size of data will it happen every single year absolutely not in fact i went back all the way to 2007 and we're going to look at every single year from 2007 to now and we're going to see what influence these seasonal tendencies had and how it helped us or it would have helped us let's say it that way we can go back in time and look at how hypothetically knowing this information back then we could have used it to get in sync with a quarterly shift or it could have been just a unique trade setup by itself since we're focusing primarily on bearish conditions we're going to be looking for areas at which the market is most likely to see a significant drop in price now we can go back in time and look at the years like we're going to now and use it to build our confidence in the fact that these seasonal tendencies do in fact hold up over a long period of time now again we're looking at about nine years or so worth of seasonal tendency price study in the new zealand dollar futures contract now this is not to say that you're going to see the exact same type of move dollar for dollar you know pip for pip in the foreign exchange market but by far and large they're going to be moved moving in the same direction generally so i have that as a a point of reference when we go over this because i'm not trying to force a perfect pip to point ratio of uh movement in both the futures and the foreign exchange market there's going to be a slight dis difference between the two but by far and large you're going to see that they generally move in the same direction so if we're going to look at this with a sober mind and understand that yes there are opportunities to be a seller in kiwi there's high probability conditions certain times of the year where it it positions itself for an opportunity to sell off with a great deal of tendency to do so seasonally and historically but we're going to focus on how we can use these bearish ideas to get us in sync with a long-term bullish quarterly shift now you're probably saying wait a minute michael you're coloring outside the lines we're supposed to be talking about bearish seasonal tendencies yes teaching is really how to use bearish seasonal tendencies not just myopically and only focus on just being a short seller we got to be able to understand that that short selling opportunity may be leading us to a quarterly move on these higher time frame charts so a decline while could be traded we have to be mindful that there's certain times of the year when the kiwi has a predisposed nature to go higher so let's take a look at a few examples in here there's obviously this one i like is uh mid february to mid march really significant uh time point where you can see there's a really nice movement between the red and the blue line that means the 19 year seasonal tendency in the 15 year seasonal tendency and again i'm going to remind you that it's taking 19 years worth of price action year after year what did these months deliver in terms of price and you can see here the mid february to mid-march time period both the red and the blue lines and again i'll remind you here that the 19-year is the blue and the 15-year is the red and what it is is a compiling of 19 years worth of data showing the historical movement of the march delivery contract and the june contract the september contract and the december contract and by showing a historical record and compiling the data the overall price direction generally is from mid february down to mid-march there's a strong tendency for the kiwi dollar to decline and you can see it very clearly in both the contrasting 19 years worth of data and 15 years worth of data so if it was the shift in and out between the two then it's most likely probably not a good time to be a buyer or seller but when they both move in the same direction and it's a sizable price swing as we can see here in the shaded area it's in my opinion that it's a pretty good chance that we'll see a decline there the second one to be noteworthy of is that notice that if we drop down into mid-march and in april the market tends to have a significant rally at that time and it rallies up to about may and both the 19 and 15-year seasonal tendency compilation shows that it does in fact make a high in may and then it sells off again giving us another bare seasonal tendency and then we have an area where we have consolidation between around the june month going into july but it makes another seasonal low around june and july and it balances bullishly and then it sells off again around mid august down into october but look what happens in september and october it generally makes a significant point of uh bullishness and puts the a large degree of buying in your scope as far as a trader you look at buying the kiwi around that september october time period now when we use seasonal tendencies the the way we want to use them are limited only to what the current market conditions are we do not go into our charts forcing the seasonal tenancy for instance we're not forcing the idea that kiwi has to make a high or top in may therefore we're going to sell in may and just hold on to it forever and then wait for it to be june july and just collect our money that's not what we're saying here what i want you to focus on is that if this seasonal tendency is in fact true and i believe it shows validity here the idea is is there something technically in price that would support that seasonal tendency are we in a bearish market did we rally up into a bearish order block did we run an old high did we see a market structure break have we in fact been moving up for the last two or three months and then are we likely to you know sell off because of an uber ball premium market and then maybe we would anticipate seeing some breakdown in the marketplace and then we can take a short or position ourselves for a bearish move lower so it's a matter of lining up what the current market conditions are it's not just take this thing apply it to the marketplace and you're going to get rich it's taking these ideas when there are strong tendencies for the market to move one side or the other any particular time of the year as you as you can see across this chart there's several other opportunities you can use you don't have to be a long-term position trader which is what i'm focusing on here using the bearish moves okay that's seen in mid-february to mid-march and then you have another move in may that takes you down into june july so there's other opportunities you can use you can see that there's a typical sell-off in the first week or so of january that goes down into february there's another sell-off that takes place around mid-june down into the first or second week of july both lines blue and red are in agreement with that and then you see another sell-off that takes place around mid-august down into the september-october time period making in the low but there is a small short-term little move that drops off mid september down into october that's the one that generally sets up a really strong buying opportunity so we're going to be a quarterly shift trader if we are going to trade these seasonal tendencies and we are short around that time period just be mindful that around september october generally makes a very strong tendency for the kiwi to rally but now let's go back and have a contrasting view as well since we're focusing on various seasonal tendencies and we're using them in a higher timeframe analysis we can take all of these bearish ideas and trade them respectively or we can go in the marketplace and say okay i'm going to anticipate these bare seasonal tendencies not trade them i'm going to anticipate them showing me the the signs that the market is in fact dropping down into the quarterly bullish scenarios that i could be a buyer so we can use bearish seasonal tendencies to trade with or we can use them as guides to lead us to the next trading opportunity that would be a quarterly shift this teaching is going to show you both okay we're going to go from 2007 all the way up to 2016. but if you're going to be a bullish trader on kiwi and we're going to be looking for bullish quarterly shifts they occur in march to april time period that's generally making a low okay make a note of this because when we go through each year i want you to keep these reference points in mind we are focusing on sell-offs between mid-february to mid-march and we're focusing on sell-offs around may going into june in july but primarily we're looking at how these moves could set up bullish conditions for quarterly shifts and the first one we're watching is it sets up a move between march and april for a quarterly low the next one is june july low that you could expect a seasonal low to form for that quarter to be a buyer and then the other one is september to october giving us a strong tendency to be a buyer okay so now think about this for a minute i just outlined the general road map on what kiwi dollar does on a 12 month cycle now if that didn't floor you you're not paying attention now you probably didn't get it and you didn't you didn't register if you're a new trader it's probably going right over your head but think about what we've just did we've outlined the macro view on what kiwi dollar does generally over a course of 12 months there's seasonal tendencies that shift in and out of the marketplace and depending on what the market conditions are for that particular time or that year one seasonal tendency is going to be favored over the other if we're in a bullish market obviously the march april june july and september october time periods are going to be phenomenal buying opportunities if we're in a bearish market that means mid february to mid march is going to be amazing sell-off and may is going to be an amazing sell-off and you have august can create a nice sell-off as well leading down to the fall lows there's also another long in here that i don't have an arrow to highlight but it's that last week of november going into the first week of december that's a nice little buying opportunity as well so in your notes as we go through these slides okay you can obviously go after you watch the video and go back and look at it as well but as we go through each year just be mindful that march april june july september october are really strong buying opportunities when it's bullish when it's non-bullish we can focus primarily on being a seller look for selling scenarios around the february to march time period and may into june for sell-offs and in august into september giving us weak points to sell on so let's go into our first year and start breaking this down give us some real examples to see if it really does appear in the charts okay you can see here this is 2007 and what i'm showing is december from the previous year 2006 all the way up to the january first of the following year so we're getting the entire year shown in every slide that we show this is 2007's price chart and here we have mid february into march that weakness that we expect to see a bearish scenario okay and also notice also that we have a small little decline here as well in may both seasonal tendencies while in contrast to the larger moves so there's several hundred pips on these declines here but now notice also these sell-offs that we expected bearishness in the marketplace they set up what opportunities remember we have that march april time period for bullish scenarios or expected bullish scenarios for tendencies to go higher june july and september october do you not see those occurring here we have the march april time period creating the very low and look at the move up from there at several hundred pips then we have the may june decline but june starts off that rally that sends us all the way up to the 81 big figure huge move then we have another opportunity where the market dips down and trades off into the september time period where we see that september october seasonal tendency to rally so while we're focusing on the bears seasonal tendencies the other seasonal tendencies that we've went through is beginning this teaching we were looking at the actual seasonal tendency chart all of the seasonal tendencies are going to have some measure of influence now again keeping in mind what the current market conditions are at that particular year it's going to be helpful for you in that regards because again we're not trying to form fit just a seasonal tendency in price we're looking for clues to justify why that scenario would be more inclined to unfold than the other in other words is it better to be a buyer on the bullish seasonal tendency or better to be a seller on the bare seasonal tenancy and years sometimes we'll work in concert with another where the bearish move will lead into the bullish move the bullish move lead into the bearish move that's perfect market symmetry and it rarely exists but sometimes in my 23 plus years doing it i've seen it a few times where it's been astonishing but as we go to our next year in kiwi here's 2008 for the kiwi and obviously everybody remembers what happened in 2008 the market uh imploded we had the financial meltdown and we have mid-march i'm sorry mid-february to mid-march uh creating the actual high in the kiwi and then we had the uh the may creating another high here where we sold off as well and notice because we are all completely all bearish on all foreign currencies the kiwi was no exception here just kept on following the rest of the year so you have to also keep that in mind too there's going to be larger big picture macro events that are going to take precedence over whatever short-term quarterly effect that you may be expecting even if it's a seasonal tendency that holds up for a long period of time you're going to have these wild card scenarios where you know just it isn't going to pan out regardless of what you would expect there's 2009 and we can see the sell-off between mid-february going into march uh that decline in there was 600 pips and we see also during the may period we did not get any decline at all on the bear side but in contrast keeping in mind how we're using these bear seasonal tendencies the one that dropped down in february into march leads us into the march april bullish scenario and it was a very strong buying opportunity there and then we had the month of june july we had a consolidation and july sent us higher going into the late fall october highs september and october had just a continuation 2010 you can see here for the kiwi we had basically a flat market in mid february to march nothing bullish nothing bearish but we had our may decline and look how many pips this thing moved this thing moves about 700 pips as a decline in the month of may but again that may decline set up the june july bullish seasonal tendency that took off and sent price higher and we also see there was a scenario for the bearish august to october time period august we had a little decline which had a small seasonal tendency to be bearish if you go back and look at the slide and all i did was retrace back down into a bearish candle which is a bullet shorter block and uptrend and it rallied off that 70 big figure moving all the way up to 79.
50 sets 950 points or pips that it moved off of just retracing into an area at which institutional overflow would give us bullishness and then we had the september october time period give us that last little leg price higher from that 74 100 to the 79. 50 level so 550 pips there as well using the seasonal tendencies as a roadmap okay we can see 2011 here see we are declined mid february going to mid march we had a nice decline there but that leads us to what the bullish march april seasonal tenancy nails it look at the rally off of that huge extrapolated move from that time period and then we have a small little decline from our may time period where we expect bearishness and that's about 350 pips just been made on a decline but finds us trading back down into the january highs so old resistance turns support there the market creates that retracement down in may just to set up another leg higher june july gives us a nice seasonal low off of a previous down candle which is a bullish order block around that 80 big figure and then it rallies all the way up to 8 800 so 800 pips using the seasonal tendency where we saw a decline in may and it rallied away and created a longer term price move very significant price moves higher and in september october gave us a swing from the 7500 to the 8200 so there's 700 pips there okay 2012. you see we had our decline mid february to mid-march several hundred pips declined about uh 400 or so on the downside and then in may we had a very significant sell-off and price moved almost 800 pips on the downside in the month of may and that gives us that june low seasonally where we saw bullishness expected and that thing took off from june lows from 7 500 all the way up to 8 450.
so that's a massive move 2013 okay we see our decline here in mid-february to mid-march several hundred pips as well and then a another decline in may which leads us to our bullish june july low and it rallies away from that and in 2014 we don't get anything bearish at all between february march mark was in consolidation and it rallied out of the consolidation so it's not expected to be a bearish area there we're looking for continuation on the upside because it's left area consolidation and in may we have a little bit of a retracement that leads to a june rally creating the high up at the 88 big figure then we had a sell-off in mid-august which was the other bearish opportunity taking it down into october again look at your seasonal tendency about the first or second week of august all the way down into october and you can see that seasonal tendency takes uh effect in this market here okay on 2015 you can see we had a little bit of a move down here in mid february to mid march and again these are weekly charts so be mindful that we're not looking at uh your five-minute charts here and then we have our decline in may seasonally speaking and june july just kept on being weak which led us into the next bullish scenario which is the quarterly shift that would be bullish that occurs in september october and that gives us a really nice rally from the 60 to 50 level up to the 6850 level almost 69. so very very handsome rally from that price point there and then finally for 2016 unchanged consolidation nothing happening in mid february to mid-march we have our decline in may it comes down into previous bullish order blocks and rallies away created another higher high up into 74. 50 so it moved from the may decline into the week before june rallying away from the 67 big figure all the way up to almost 7 500 big figures so rather significant price moves as a closing note i want you to think about how these ideas lead to a roadmap idea of where price should go generally speaking and when to focus in on very significant price moves when they when do they usually occur see it's one thing to say okay i can see when an indicator bearishly diverges and it should give us a sell signal or it should some you know suggest some consolidation in a strong uptrend we can understand that but it doesn't really tell us when the divergence should occur and seasonal tendencies tell us a specific time element that escapes most people that don't use them most traders don't even have any understanding these things exist now because you've been exposed to them with a great deal more detail much more than we saw when i was teaching in the free tutorial area we can see how we blend these two ideas time and price with quarterly shifts and when the seasonal tendencies come into the picture as well there's a strong tendency for the market to react when a few things come into confluence if we have a seasonal tendency to suggest bullish prices when the market's already predisposed to go higher because it's in a bullish market and it's in a time of the day when the market should be bullish and it's also at a time when the market is indicating that interest rates are supporting that bullish idea it's also supported in the dollar index when all these things come together they dovetail into a beautiful tapestry where you're going to see a profitable outcome in your analysis now as long as you stick to those types of trades you're going to do very very well you don't need a whole lot of trades throughout the year and notice that there's not a whole lot of overlapping going on between what we've shown so far certain currency pairs have certain seasonal tendencies now by far and large they're all going to bend the knee to the dollar index and we're going to have a 4.
