How to trade seasonal patterns in forex?
18
en.fxdailyinfo.com
  • 1
  • 2
19
7

How to trade seasonal patterns in forex?

How to trade seasonal patterns in forex?

Seasonal patterns trading in forex

 

Trading foreign exchange markets (Forex) is one area where location plays no role, yet it helps traders to be aware of certain environmental factors that define the present state of their investments. Regarding economic data, various indicators are produced on a national level (e.g., consumer price index). However, if we focus our attention on trade between countries, we can acquire information on their foreign trade activities that provide us with new signals.

 For example, Germany is the largest economy in Europe and if it reports an increase in exports of 6%, then traders expect the rates of its currency (Euro), also known as the Deutsche mark (DEM) to appreciate against other currencies like USD or JPY. This has come to be known as the trade-weighted index (TWI) and it is one of the measures that describe the relative strength or weakness of a currency.

 

Mutual trading opportunities

One can also look at mutual trade between nations for finding out opportunities in investments. If we consider Mexico, its major trading partners are the United States, Canada, and Brazil. If the Mexican Peso depreciates against the U.S dollar, there is a possibility of investing in pesos to take advantage of its strengthening again. Another country that provides traders with interesting opportunities in Great Britain since it trades heavily with European countries like Germany and Italy. The above information can be exploited by traders who are aware of technical indicators.

Another interesting piece of information is a country's trade balance, which shows the difference between imports and exports of a particular nation over a period of time. If we take Germany as an example, it had a trade deficit in the year 2014 (-120 billion dollars). As seen from the chart below, this is also confirmed by two moving averages with a downward slope. These indicators are used by traders to forecast that the DEM will depreciate against the USD.

At times, looking at one indicator isn't enough for forecasting trader sentiments about a currency. At this juncture, it becomes necessary to combine various tools like support and resistance levels of candlesticks with other indicators like Stochastic Oscillator and Relative Strength Index (RSI). The following chart shows that the DEM depreciated against the USD, but found support at a certain point and then began to rally. This also corresponds with our observation of two moving averages converging towards each other.

The above discussion indicates that investors should pay attention to environmental factors like foreign trade activities, which influence the strength of currencies. They should also be cautious of conditions like trade deficit or lack of demand for a currency, which can lead to depreciation.

The promotion is published here only for an informative purpose, THIS IS NOT FINANCIAL ADVICE!
Forex Analyst

Fxdailyinfo.com

Fxdailyinfo have large portion of news for Live, Demo and weekly contest which is very helpful for all type of Traders. Broker houses offer Live contest

Recent Comments

Write a Comment

Related Bonus

Forex Forecast: 5 - 9 December 2022
Forex Forecast: 5 - 9 December 2022
04 December 2022 09:10 PM
300% For Each Deposit - FreshForex
300% For Each Deposit - FreshForex
04 December 2022 04:56 PM
65% FXChoice Bonus on Crypto Deposit
65% FXChoice Bonus on Crypto Deposit
02 December 2022 11:56 PM
FXChoice $30 Non-Deposit Forex Bonus
FXChoice $30 Non-Deposit Forex Bonus
30 November 2022 01:37 PM
50% FXChoice Welcome Deposit Bonus
50% FXChoice Welcome Deposit Bonus
30 November 2022 11:34 AM
Bull Sphere $30 Free Welcome Bonus
Bull Sphere $30 Free Welcome Bonus
29 November 2022 10:01 PM
RoboForex Welcome Bonus 30 USD
RoboForex Welcome Bonus 30 USD
29 November 2022 03:19 PM
50% Bonus on Each Deposit - OctaFX
50% Bonus on Each Deposit - OctaFX
28 November 2022 08:06 AM
$35 HotForex (HFM) No Deposit Bonus
$35 HotForex (HFM) No Deposit Bonus
27 November 2022 11:04 AM

Forex Featured Brokers

FXChoice

65% Crypto Bonus, Min: Deposit: 100 USD, Broker Type: STP/NDD,
50% Welcome Bonus

Start Trading View Profile »
OctaFX

Free Trading Signals, Broker Type : STP/ECN Leverage up to 1:1000,
50% Deposit Bonus

Start Trading View Profile »
HF Markets

Minimum Deposit $5, Leverage up to 1:1000 Broker: STP/ECN/NDD,
100% Trading Bonus

Start Trading View Profile »
RoboForex

Minimum Deposit $200, Leverage up to 1:1000, Broker Type: ECN/STP,
30 USD Free Bonus

Start Trading View Profile »
FXTRADING.com

50% Trading Bonus, Broker Type: STP/ECN, Leverage up to 1:500,
$600 Welcome Bonus

Start Trading View Profile »
ATFX

Leverage up to 1:400, Minimum Deposit $100, Broker Type: NDD,
50% Deposit Bonus

Start Trading View Profile »
Forex Forecast: 5 - 9 December 2022
05 December 2022 01:39 AM
300% For Each Deposit - FreshForex
05 December 2022 01:21 AM
65% FXChoice Bonus on Crypto Deposit
05 December 2022 01:16 AM
FXChoice $30 Non-Deposit Forex Bonus
05 December 2022 01:56 AM
50% FXChoice Welcome Deposit Bonus
04 December 2022 06:38 PM
Bull Sphere $30 Free Welcome Bonus
05 December 2022 12:59 AM
RoboForex Welcome Bonus 30 USD
04 December 2022 11:10 PM
50% Bonus on Each Deposit - OctaFX
04 December 2022 09:53 AM
$35 HotForex (HFM) No Deposit Bonus
05 December 2022 01:10 AM
25% Rescue bonus on your next deposit
03 December 2022 11:06 AM
ATFX $100 Welcome Credit Bonus
04 December 2022 01:24 PM
HFM $50 Forex No Deposit Bonus
04 December 2022 09:44 PM
FXChoice $30 No Deposit Bonus now
04 December 2022 10:57 PM

Do you have forex new bonus or promotion?

Tell us your bonus or promotion FOR FREE. It is easier than you think!
Add Promotion!


moneta_footer.png
Best MT4 Broker
with lowest cost
Exclusive Access to
PRO Trader Tools
Free Trading
Signals
25% Rescue
Bonus New
Zero Swap Fees
on Gold