Dollar High Probabilities for June, Up or Down? A “true” trader is trading probabilities. Probabilities are determined from past events. If a events keeps on occurring in the past, it has a high probability of occurring again. Of course, there are no guarantee at all!
A lot of people look at seasonality to find high probability situations. Since there are no guarantee’s, you have to confirm the results of a seasonality scan with technical. For this article, we are going to focus our research behind the Dollar. Why? The US Fed is going to have a meeting this month to determine to raise US interest rates or keep them the same.
In order to forecast, the dollar for this month with seasonality, we have to illustrate how seasonality worked in the past to see if it actually works. Fortunately, we don’t have to go back to far in the past to find a high probability setup for seasonality for the US dollar. The month of May had a high probability seasonality pattern.
For seasonality, we are going to go the Mobile App/Website www.alerttrades.com. This a free product that we created that offers seasonality for all global instruments around the world. We evaluated all the seasonality products world wide but not one product met all our requirements. As a results, we developed our own product that offered all the tools we need as a trader. It tells us the following:
- Probabilities for Bullish or Bearish
- Probabilities if an instrument is going to trend that month or consolidate
- Average % Move
- Max % Move
- Max % Drawn down,,
Below is the Dollar Statistics for the month of May from alerttrades Mobile/Web application.
The statistics show that the US Dollar had a high probability of going up in the month of May with a Reward/Risk of + 3:1. Only two years, it didn’t go up which was 2009 and 2006. Furthermore, the move up was going to be a trend move, not a consolidation pattern move. As trend traders, this is exactly, we need in order to get a good Reward/Risk.
Now, we had to look for verification on the technical charts. Below is the Weekly chart for May for Dollar Futures provided by eSignal.
Price broken below the cloud but needed to follow through to start a bearish trend. It didn’t do that at all. In fact, the first week in May, it established a low and held a support at 93.017 and started to move up trying to get to the major resistance at 96.165. As long as the resistance at 96.165 holds, there is high probability for price to retest the low at the support of 93.017. If it breaks this support then a long term trend can be establish.
Below is the 240m chart provided by Esignal. It shows when price broke above the cloud and started the trend. This was the confirmation behind the seasonal pattern. From the cloud breakout to the end of the month, it went through over a 2% movement. The prediction was for a 2.3% movement.
Ok, we have now established the technique we used for last month in order to establish our June forecast for the Dollar Futures. Below is the seasonal pattern for the month of June for Dollar Futures provided by alerttrades Mobile/Web application.
The statistics indicate, we have a high probability of going down. However, the reward/risk is not good i..e which is less than 1:1. Also, the month of June doesn’t have a high probability of starting a trend. All the information indicates a lot of volatility. Let’s see how this translates to the charts.
Based on the weekly charts shown above, we have a high probability to retest 93.017 as the resistance at 96.165 holds.
Below is the daily chart. Price is in the cloud which is causing the volatility. Also, it is indicating that price is still trying to reach the resistance at 96.183. A minor support at 95.442 is holding price up and allow it to try to reach the resistance. As long as this support holds, we have a high probability of reaching 96.183.
Below is the 60m time frame. It broke below the cloud and it is pulling back. The pull back resistances are 95.697 and 95.62. The support controlling the bearish trend.
In summary, the charts aren’t indicating a clear bearish move to support the seasonal statistics. The reward/risk in the seasonal statistics indicate that the bearish move will not be long term at all. Therefore, we are going to keep focus on lower time frame and pull back trades with Ichimoku to keep the risk low.
EDUCATIONAL USE. Commodity Futures Trading Commission, Forex, Futures, Equity and Options Trading has large potential rewards, but also has large potential risk and may not be suitable for everyone. You must be aware of the risks and be willing to accept them in order to invest in these markets. Do not trade with money you can not afford to lose. This is neither a solicitation nor an offer to Buy/Sell. No representation is being made that any account will or is likely to achieve profits or losses similar to those discussed on this document. The past performance of any trading system or methodology is not necessarily indicative of future results. All information provided on the Blog is for educational purpose.