At the beginning of the month it is wise to check the Top Picks on Alert Trades for the best seasonal patterns for instruments based on probability. One currency pair on the list was CADCHF:
The minimum Confidence score we want to consider high probability is > 70% so this fits. We want a Seasonal Index Value for the month to be higher than 12% to represent a significant movement during the month compared to the rest of the year. Finally, we want to see the Move, in this case 2.9%, versus the Max Drawdown, 0.8%, fit within a 3 to 1 Reward to Risk ratio. All these criteria being met we can incorporate technical analysis to find potential support and resistance levels that may hold over the course of the month. I drew this up on June 1st with projections of the Move %, Max Drawdown %, and Max Profit % to give me a forecast picture:
Next I drew major Support and Resistances from the Daily Ichimoku levels to see how they align with what the seasonal pattern suggested based on its predicted percentage movements. The Daily Senkou B support lies in the middle of the expected bearish move and might create an obstacle.
Then I drew major Support and Resistances from the Weekly Ichimoku levels to find out where the seasonal pattern may find obstacles outside the Daily over the whole month. As it turned out, the predicted move and maximum line up with Weekly support levels.
Now with my levels set I need to watch for opportunities in the coming days for a bearish trade opportunity. By the close of the first week of June price had broken the Daily support setting up a bearish Kijun Sen cross strategy.
The final touch of the resistance was on Friday, June 10th. This resistance had proved itself twice before to contain the consolidation. By Friday the Daily timeframe above had waited long enough for the timing elements to setup a bearish breakout of the consolidation. The trade entry was a market order short at 0.7593, the Stop at 0.7603 risking 10 pips, and the target was 0.7467 for a profit of 126 pips.
With price now at support and trying to form a pivot on the Daily timeframe the first trade of this month is over. There still remains a 1.2% to 2.7% bearish move in CADCHF predicted for the month as of writing. We will be waiting for the Daily timeframe to setup bearish once again and then seek trading opportunities on swing trading timeframes to capture the next movement.