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Seasonal correlations of the currency markets
Euro
FX
Swiss
Franc
Japanese
Yen
British
Pound
Canadian
Dollar
Australian
Dollar
- the black line chart represents the current market
- the blue line represents the 10 year seasonal pattern (1999-2008)
- the red line represents the 5 year seasonal pattern (2004-2008)
- the black line chart represents the current market
- the blue line represents the 15 year seasonal pattern (1994-2008)
- the red line represents the 5 year seasonal pattern (2004-2008)
- All years in study: 08 07 06 05 04 03 02 01 00 99 98 97 96 95 94 93 92 91 90 89 88 87 86 85 84 83 82 81 80 79 78 77 76 75
- the black line chart represents the current market
- the blue line represents the 15 year seasonal pattern (1994-2008)
- the red line represents the 5 year seasonal pattern (2004-2008)
- All years in study: 08 07 06 05 04 03 02 01 00 99 98 97 96 95 94 93 92 91 90 89 88 87 86 85 84 83 82 81 80 79 78 77
- the black line chart represents the current market
- the blue line represents the 15 year seasonal pattern (1994-2008)
- the red line represents the 5 year seasonal pattern (2004-2008)
- All years in study: 08 07 06 05 04 03 02 01 00 99 98 97 96 95 94 93 92 91 90 89 88 87 86 85 84 83 82 81 80 79 78 77 76 75
- the black line chart represents the current market
- the blue line represents the 15 year seasonal pattern (1994-2008)
- the red line represents the 5 year seasonal pattern (2004-2008)
- All years in study: 08 07 06 05 04 03 02 01 00 99 98 97 96 95 94 93 92 91 90 89 88 87 86 85 84 83 82 81 80 79 78 77
- the black line chart represents the current market
- the blue line represents the 15 year seasonal pattern (1994-2008)
- the red line represents the 5 year seasonal pattern (2004-2008)
- To read
The description
This market analysis is based on the seasonal tendencies which are stable at average 84%. Having the information about the future trend of the futures contract price with probability 84% a trader has an advantage to adjust his trading plans on FOREX market avoiding the wrong positions opening according to the trading strategy and the trading efficiency could be considerably raised.
Futures are agreements to buy or sell an underlying instrument at some appointed delivery date (or final settlement date) at a predetermined price.
Futures are represented by the two parties, the Buyer and the Seller. The Buyer undertakes to buy the underlying instrument at the appointed date. The Seller is obliged to sell the instrument at the appointed date. The name of the underlying instrument, its size, delivery date of the futures and its price specify these obligations.
The price of the futures contract is closely connected with the current price of the asset which is the basis of the futures contract. The asset is hardly ever delivered, but in spite of it the delivery is determined by the exact ratio of the current spot and futures prices.
The interaction of the spot and futures prices is very important. Speculation on the futures market is specified by the two important principles of the futures price formation — parallelism and convergence. These principles are connected with the ratio of the spot and futures prices.
Parallelism is associated with the fact that the same factors influence the spot and futures prices. In other words there is a tight correlation between the spot and futures prices. The information which efficiently influences the futures prices is available both for the commodity and the Forex speculators. Above all the tangible goods are available to store and there is always an opportunity to store the goods with future delivery. It provides conditions for arbitrage «spot—futures», which strengthens the interaction of the spot and futures prices.
As the spot and futures prices move interdependently, we can likely suppose the future price trend on the FOREX market at any calendar period having analyzed the multiyear seasonal trends of the futures prices.
SEASONAL TENDENCIES
Seasonal prices trends in their nature do not pay attention to the current market situation. Seasonal trading is an isolated certain calendar period when the market has a sequence tendency to move in the same direction during many last years. In order to build up the seasonal tendency, the MRCI does research during the last 5, 15, 25 years or more, depending on the financial instrument. However independently of the analyzed period, the essential philosophy is the same.
The Seasonal Correlated Charts represent the historical moves of the contracts during 55 years and statistically define what previous years were most similar to the current market. The last five years are selected; the common model is created and added to the current market. The final diagram (green in this case) projects what the market must do if it remains the same in the future. The probability of the tendency to hold on in such cases is at minimum 84%.
The Seasonal Pattern represents a model of the market trend which was stable during 5, 15 and even 25-30 years.
