Since a new month has started the best way to asserts the probability of where the market is likely to be heading in this month is for us to look at the seasonality patterns. The seasonality cycles will bring in a new dimension in which you can analyse the market. Seasonality are a predictable change in price that repeats every day, week, month, year at the same period in time.

You can find more details how this seasonal patterns affect the exchange rate and more importantly how to correctly use them in your trading activity in one of my articles here: Seasonal Cycles in FX Trading

This seasonality cycles will only give you the tendency of an particular currency pair to bottom or top or rally or fall, at certain point in time. Going forward we're going to analyse what are the December seasonal patterns in FX market.

  • EURO December Seasonal Patterns


Even thought both the 15yr and 10yr averages price, points to a strong euro in December the 5yr average price, which takes in account just the most recent action, points to a much more moderated gains. Taking in consideration that we're in a strong bearish trend and with the broad based dollar strength coupled with the dry in liquidity due to the holiday season we should expect much more narrow ranges.

  • GBP December Seasonal Patterns

All the averages prices are basically saying the same thing narrow activity in the month of December as due to low liquidity and low volatility trading chase away during the holiday season so it's best to trade it from the short term perspective.

  • AUD December Seasonal Pattern
We can see that for the first part of the month all 3 averages price points to a narrow activity for the month of December due to the holiday season, however as we approach to the end of the month we can see aussie being quite strong especially if we take in consideration the 5yr and 10yr averages price.

  • JPY December Seasonal Pattern
Since BOJ has started the massive QE program we can see this seasonality patterns have reversed and usually as we enter the autumn season JPY is weakening not straightening as the seasonality may suggest. But we can see that activity chase away due to the holiday season and the jpy move is contained in narrow ranges.

Best Regards,
Daytrader21
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